Thanks @AaveLabs for the proposal and the update, and more generally for taking initiative in this situation. I am in support of the proposal to release the frozen funds to Defi United’s effort without any waterfall distribution conditions.
Much is unusual and unprecedented about this situation, including the wide range of the affected parties and the fact that Security Council took action in an exploit unrelated to any vulnerability in the Arbitrum Protocol itself. It isn’t self-evident to me that the affected parties on Arbitrum should be given priority to funds that the Security Council was able to freeze in an industry-wide recovery process like this, and I don’t see anything in the Arbitrum DAO Constitution indicating that such a policy should necessarily be the one followed. In the already remarkable recovery effort that AAVE has been leading, we’ve seen many parties step forward and donate large sums of ETH to help make users whole, and they (as far as I know) have done so without any conditions of prioritizing specific users. Many of the biggest donors are projects and individuals who weren’t at all responsible for the exploit and who aren’t directly affected by it. Given that, and adding to that the fact that’s what’s being considered here isn’t a donation of any funds from the Arbitrum DAO’s reserves, but rather recovery of a pool of entirely stolen funds, I think it would be most fitting and appropriate for the DAO to follow suit in this collective effort.
In their post, @AaveLabs seems confident that they will likely be able to restore rsETH to its full backing, in which case discussion about the distribution would be (happily) moot anyway. That said, while I’m glad to see AAVE’s optimism, I think it would be helpful to have some more concrete details about the risks of falling short. The language in the update seems to suggest that so long as the public proposals like this one pass, and barring and operational errors, full restoration is likely. An updated breakdown of the numbers as they stand, and the specific scenarios that would lead to losses (and their estimated likelihood etc.) would probably help other delegates gain confidence in this decision (though given the urgency to move things along, I encourage delegates not to wait for further updates before participating in the discussion). My hope is that given the uptick in contributions to Defi United even in the past few days, the update will be a positive one.
As for expediting the process by, say, shortening or skipping the snapshot phase for this proposal, I would support this, though this would only really make sense when/if more delegates publicly weigh in. (There are other means of expediting the process that I imagine may be under consideration, but I suggest holding off on that discussion for now for the sake of keeping this thread focused).