Ethereum stablecoin DAO to vote to save, destroy $1.8 million

Ethereum stablecoin DAO to vote to save, destroy $1.8 million

The newly minted Lybra DAO will start its governance lifecycle with a vote to save or destroy $1.8 million belonging to investors who failed to migrate their tokens.

Lybra DAO manages the Lybra Finance, a DeFi stablecoin protocol on the Ethereum blockchain, which sits on $243 million in investments. On August 31, the protocol launched a new version called v2 that necessitated a migration of its native LBR token to this new version.

Although the token migration process was expected to last for 30 days until October 1, some investors missed this deadline. According to the original plan, their tokens, which are currently worth $1.8 million, are to be burned forever, thereby making them worthless.

The outcry lasted for several hours, with those who missed the vote having to respond to the outcry on social media. Many criticized the protocol for establishing a short window of time for the migration.

Lybra said the brief nature of its own process was due to the need to complete its protocol upgrade quickly and protect its investors.

Token migrations frequently have long deadlines, with some even having an indefinite timeline for completion.

The project teams are not keen on maintaining the infrastructure that supports old tokens or the migration process indefinitely, DeFi builder Andrey Shevchenko told DL News.

The Lybra team has now responded to the outcry and will not immediately burn the tokens.

The second recommendation also allows for migration, but with a 20% haircut for investors who did not meet the deadline. There's no vesting requirement, unlike the previous option.

Both migration alternatives will have a three-month window, the government said in a statement.

The final recommendation is to adhere to the original plan where all non-migrated tokens are burned.

Lybra said its contract does not have the ability to destroy tokens in investor wallets. The affected tokens will instead be restricted from being minted from the v2 smart contract.

The proposal for Lybra's proposal could be changed before being voted on Friday, and the recommendation to burn all non-migrated tokens comes with significant implications for the DAO.

This is because onlyholders of migrated LBR tokens have governance power in Lybra DAO.

Investors who don't migrate their tokens cannot vote on this proposed proposal and have no authority to protect their interests.

As such, there are calls for this option to be removed from the recommendations up for voting.

Some DAO members say there should be some form of punishment for investors who did not meet the migration deadline, given the team's daily updates on the process.

Investors can purchase already migrated LBR tokens to be part of the governance process.

Osato Avan-Nomayo, our Nigeria-based DeFi correspondent, is on the phone to answer questions. He focuses on defi and tech.