Proposal for Addressing the Alex Security Incident and Compensation Plan

Security Incident
1

Proposal for Addressing the Alex Security Incident and Compensation Plan

Introduction:
The recent security incident at Alex is deeply regrettable. While the team’s efforts to resolve the situation are commendable, there is room for improvement in terms of post-incident response and compensation plans. The team’s communication with the community has been insufficient, and it is encouraging to see that they are now formally seeking community input.

Analysis:

  1. Compensating victims using $ALEX tokens would have a negative impact on the price of $ALEX, potentially creating more victims and eroding trust among ecosystem participants. It is crucial to minimize any actions that could devalue $ALEX.
  2. From a long-term project management perspective, it is understandable that the foundation is cautious about investing its own funds. However, if key participants lose trust and leave, it will be even more challenging to operate in the long run.

Proposal:
Assuming the foundation believes it can recover the stolen assets from the hacker, I propose the following:

  1. The foundation should deposit its funds into a Stacks ecosystem DeFi platform (preferably Zest Protocol if no other options are available) to borrow $STX. This borrowed $STX, combined with the assets recovered so far, should be used to compensate victims as close to 100% as possible.
  2. During this process, the foundation may need to collaborate with Zest Protocol to add $ALEX as collateral or borrow assets from cooperating VCs.
  3. The foundation would be responsible for providing interest on the borrowed $STX until the assets are recovered from the hacker, allowing for a quick resolution of the incident. Zest Protocol would benefit from protocol fees, while Alex could resolve the incident at minimal cost.
  4. If the demand for $STX loans becomes too high, resulting in excessive interest rates, the foundation could request the Stacks Foundation and ecosystem participants to deposit $STX into Zest Protocol to help regulate the rates.

In summary:

  1. Collaborate with Zest Protocol to deposit the foundation’s assets and borrow $STX for compensation.
  2. Compensate victims with $STX as quickly as possible, aiming for 100% compensation to restore trust.
  3. Once the assets are recovered from the hacker, repay the loan along with interest.
  4. Work collaboratively to regulate loan interest rates as much as possible.

Conclusion:
The Alex security incident has highlighted the importance of swift action, effective communication, and a well-designed compensation plan. By implementing the proposed solution, Alex can demonstrate its commitment to its users, minimize further damage, and restore trust within the community. The foundation should carefully consider this proposal, along with feedback from the community, to develop a comprehensive and effective response to the incident.

3 Likes
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It seems obvious that the “team” and strategic investors need to take a hit to generate support for any proposal. In the end they will have less of a succesful project or more of a doomed one. That simple. Everyone sees it but them.

1 Like
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This proposal has been used as reference in this 𝕏 post: x.com

SEE: Proposal Category 1: Seek Funding from VCs or Borrow STX through Collateralized Loan from Stacks + Proposal Category 5: Borrow from Zest Protocol

4

I truly hope they will reconsider using APower as the measure of voting rights, not Alex token. APower is the fair measure.

1 Like