[SCP-216] Defi Unites - Community Recovery Distribution for April Revenue

Summary

This proposal asks FOX governance to approve a one-time Community Recovery Distribution of $150,681.30 from revenue. This number is derived from verified protocol exploit volume that passed through the ShapeShift app during April.

The rFOX revenue-sharing program operated as designed: stakers received the amount owed based on the program’s normal end-of-month calculation. This proposal concerns the remaining unallocated revenue and puts governance at the center of approving distribution to the affected DeFi communities rather than retaining it in the DAO treasury.

Background

In April, DeFi experienced one of the most severe periods of exploit activity in recent memory. ShapeShift is no stranger to this reality/outcome. After review and verification, the DAO was able to trace and verify a portion of April volume associated with affected DeFi communities. That activity generated revenue through the ShapeShift app.

The rFOX distribution for April was honored according to the program’s existing rules, based on the revenue displayed on dashboards, in the apps endpoint, and calculated at the end of the month. While this is an unusual circumstance, the program worked as designed.

The question now is: what should governance decide to do with the remaining revenue?

Proposed Distribution

This proposal approves the following distributions:

These amounts are based on internal tracing and revenue calculations. Because related investigations are ongoing, the underlying spreadsheet will not be published publicly. Contributors or stakeholders who need additional context may request access directly from FBL if they are curious.

Rationale

This proposal is intended to do four things:

1. Confirm that rFOX worked as designed.
   The April rFOX distribution was honored based on the program’s normal calculation process (25% split 5% burn). Stakers received the amount owed under the rules in place at the time. This proposal makes it clear that rFOX will continue as a gross revenue calculation, pending any extenuating circumstances.

2. Give FOX governance authority over the remaining revenue.
   The remaining revenue could be retained by the treasury. This proposal instead asks governance to approve redirecting it to affected communities.

3. Make a values-based decision without compromising decentralization.
   ShapeShift supports open, permissionless, self-custodial finance. That does not mean the DAO needs to profit from activity linked to losses in identifiable DeFi communities.

4. Set a practical precedent for future cases.
   When revenue can be reasonably tied to verified harm against identifiable communities, governance should have the option to approve a recovery distribution after existing program obligations have been honored.

Governance Precedent

This proposal does not create an automatic clawback, blacklist, compliance program, or off-chain enforcement regime.

Instead, it establishes a governance precedent:

If ShapeShift earns revenue from activity that can be traced to security incidents affecting identifiable DeFi communities, and if a verified recipient can be identified, FOX governance may choose to distribute remaining unallocated revenue to those affected communities after existing protocol or program obligations are honored.

This keeps the decision with governance while preserving the integrity of existing programs like rFOX or future referral staking or mining initiatives etc. Think of it as a template and starting point for a volatile future.

Benefits

Approving this proposal would:

• Return $150,681.30 to affected DeFi communities.
• Demonstrate that ShapeShift can act in good faith without abandoning decentralization.
• Confirm that rFOX stakers were treated according to the program’s rules.
• Build trust with broader DeFi communities during a difficult period for the ecosystem.
• Create a sensible precedent for future governance discretion in similar edge cases.

Tradeoffs

The main tradeoff is that the DAO treasury would forgo $150,681.30 in revenue.

That is not trivial. ShapeShift has real budget and runway constraints, and treasury revenue matters.

On the other hand, retaining this revenue carries its own cost. In this case, the reputational, ethical, and ecosystem-alignment benefits of returning the funds need weighing against the the short-term treasury benefit of keeping the funds.

Specification

If this proposal passes, the DAO will:

1. Send 133,905.64 USDC to the Balancer multisig:
   0x10A19e7eE7d7F8a52822f6817de8ea18204F2e4f

2. Send 16,775.66 USDC to the DeFi United address:
   0x0fCa5194baA59a362a835031d9C4A25970effE68

3. Treat these transfers as a one-time Community Recovery Distribution.

4. Record that the April rFOX distribution was honored under the existing rFOX calculation and distribution process.

Vote

A For vote approves the Community Recovery Distribution and authorizes the above transfers.

A For with changes approves and indicates improvements to the proposal before ideation period ends.

An Against vote rejects the Community Recovery Distribution and leaves the remaining revenue with the DAO treasury unless governance later approves a different action.