Recovery Proposal 3 of 3: Reduce inflation and launch the v2 Onyx Money Market Protocol

As discussed in the Onyx AMA, the community has proposed a third recovery proposal to help with the recent Onyx exploit on the PEPE market.

Proposition #3 suggests that the Onyx Protocol focuses on its XCN DAO to help the exploit. The mechanisms of the proposal:

  1. The DAO would reduce the staking rewards to a floating 10% APR, which are currently at 40%, thus decreasing inflation of the XCN token staking by over 30%.

  2. The DAO would pause all the current lending markets and wind them down. The DAO would take a snapshot of user balances and calculate them in a public open post, which includes wallet addresses. The DAO would pay back these addresses on a rolling basis throughout the accumulator of protocol revenue.

  3. The DAO would reduce the APY in the money markets of the v2 launch to make yields more sustainable and lower XCN inflation. Reserve factors would be increased so that protocol revenue would accumulate.

These mechanics would help recover funds for the v1 users without causing a large XCN utilization of the token facility with LDA & others and without giving up the Onyx brand and XCN token to Strike.


“The DAO would pay back these addresses on a rolling basis throughout the accumulator of protocol revenue.”, but it seems that the “treasury” of Onyx V1 is only 114,434.47$, and therefore, it’s hard to imagine that the protocol revenue will cover the loss of users in Onyx V1, and the proposal has no structure of the Onyx V2.

Hey @Tristanman whats your opinion on this ?

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Hello everybody!

I have some XCN on Revolut.
What will happen to them after the change?

The 3rd option is also NOT optimal, in comparison to the LDA Captial Facility.

For starters, it makes no guarantee that any users will be made whole, nor does it promise that any users will be made whole in the future. This instills little trust and confidence in the process and protocol as a whole. I’ve seen this done in Qubit Finance, where they assumed that future revenue will pay out, but the V2 fared worse than the V1 because they lacked faith and confidence in the team and the protocol’s future. In their case, this meant terrible revenue in V2, incapable of making any users whole.

Second, while the APY reduction seems excellent in theory, it is detrimental to Onyx’s overall structure. Because of the substantial incentive structure, relatively new money markets like Onyx itself are generating income and attracting capital inflows. If the protocol’s already low incentive structure is reduced even further, there will be minimal liquidity coming onto the lending platform. As a result, less TVL will desire to invest in Onyx, resulting in lower income. Essentially, Less incentive → Less TVL → Less Revenue → Less protocol funds and recovery fees. Furthermore, this assumes that no new good incentive money markets will emerge during this bull market to gain market share from Onyx.

Third, I discussed how perception influences the value of cryptocurrencies. As a result, a cryptocurrency that generates revenue and uses that cash to support itself will have a far higher perception and worth than other cryptocurrencies. As a result, in the current situation, where protocol profits are being utilised to and fully fund XCN, XCN has a valuable perception among people and its users. However, if the protocol money is diverted to the recovery fund, the perceived value of XCN falls because it lacks revenue to support itself. Furthermore, becoming an ongoing cost for XCN holders which may prevent prospective buyers.

Some might argue that a partial revenue diversion is a viable approach. However, I believe it does not inspire future confidence because it appears to new users that we have not recovered from the hack, which would discourage new or existing users from joining the Onyx Protocol by supplying further liquidity or purchasing XCN which affects XCN’s value and holders.

In conclusion, the LDA Capital Facility remains the most viable option for XCN investors and users. It ensures that the majority of users will be nearly, if not completely, whole again. It instills confidence in Onyx Protocol’s ability to preserve and advance the protocol. Moving beyond and recovering from the hack, building trust in the team and increasing confidence in XCN. This makes it possible for XCN to generate income in the future which would be to maintain its own ecosystem. All of this considerably improves XCN’s perception, allowing XCN’s value to flourish the most in this ongoing bullrun, which is beneficial to all XCN holders and users.


Absolutely a great option

you are OG Man . you have great depth in knowledge about everything

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I am glad that team is trying to coop with all troubles. It definitely deserves respect that the team did not give up

Unfortunately, not very pleasant, but extreme and necessary measures will be taken now to save the project.


Proposal seems good!

Appreciate the update, Alex. The XCN DAO proposal looks promising, reducing inflation, recovering funds for v1 users, and maintaining Onyx integrity. Community power!

funny how many fake accounts are on this thread and in telegram. Cant believe i got rugpulled by you scammers. im sure you will pay yourself bonuses for a failing project. sc

:frowning_face: :unamused:

I think it would be a great suggestion, it seems useful

Even though the offers are good, it is still the community that will choose.

The LDA Capital Facility is still more optimal than this option.

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when this proposal will be live for voting ?

For those looking at proposal 3, do consider proposal 4 thank you.

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Soon, the DAO will initiate voting on proposal #3 (this thread).

Remember to stake your XCN to get voting power.

you should have created proposal long time back to reduce apr dude

@alex when proposal will go live , its already passed 1 day of proposal 2