On November 17, 2020, malicious hackers attacked the OUSD smart contracts and were able to drain over $7M USD of user deposits (including $1M of deposits from Origin’s founders and company treasury). A couple of days later, we committed to making our users whole over time even if we were unable to recover the lost funds. We take pride in the fact that we chose to compensate our users when many other DeFi projects that were also hacked have chosen not to do so or elected to provide IOUs that have indeterminate payback time horizons. Today, we’re providing an update on the compensation plan with detailed specifics and are gathering feedback from affected users. In the next few weeks, we will launch the compensation plan and allow users to claim funds.
We have updated our calculations with a slight change affecting a few eligible accounts. Please review the updated file and contact us on Discord if you have questions about a change in your eligible balance.
It’s been a couple of weeks since the OUSD hack occurred, and we’ve taken time to carefully analyze how our users have all been impacted. We appreciate everyone’s patience as we worked to develop a detailed plan for providing compensation equal to 100% of the value deposited to OUSD at the time of the exploit. Depending on your OUSD holdings as well as your activity before and after the hack, you will be compensated in various ways.
Approximately two-thirds of affected users will receive full compensation in the form of newly minted OUSD (fully backed by stablecoins, audited, and relaunched with new security measures in place). The remaining affected users — mostly larger depositors — will receive 25% of their compensation in OUSD upfront and 75% of their compensation in Origin Tokens (OGN) that are locked for one year. To further compensate these users for the time value of money and not having all their funds available upfront, locked OGN will earn interest at 25% over the year. This means that for the OGN portion of compensation, users will receive 1.25x the value in OGN one year after the compensation program goes live in the upcoming weeks. As a reminder, OGN is the governance token for OUSD, Dshop, and the rest of the Origin platform and is currently a highly liquid token on top exchanges like Binance, Huobi, Upbit, Uniswap, etc.
We set out to develop a compensation plan that was fair to our Beta users but also did not compromise our company’s runway or harm existing OGN holders. It’s important to stress that, while the out-of-pocket portion of this compensation will be a substantial one-time expense for Origin, we remain well-capitalized with plenty of runway to ensure the success of OUSD and our other e-commerce products. Given the traction that OUSD was experiencing in the weeks leading up to the hack, we’re confident that OGN holders are best served by us regaining momentum with OUSD and accruing value to OGN through future revenue-generating fees. We chose a one-year lock-up to ensure that a large amount of OGN reserved for compensation does not immediately hit our circulating supply. Additionally, the founders and Origin itself will not receive any compensation as a part of this plan despite having lost over $1 million in the hack.
100% OUSD up to the first 1,000 + 25% OUSD after the first 1,000
75% OGN after the first 1,000 OUSD
First, 100% of eligible losses up to 1,000 and 25% of eligible losses above 1,000 will be paid in the form of restored OUSD. Once we deploy the compensation contracts, users will be able to claim this portion from the OUSD DApp. The additional 75% of eligible losses will be paid in the form of OGN, which will be locked for one year and earn 25% interest. As a result, the eventual compensation received will be approximately 118.75% (assuming no change in OGN price). The amount of OGN will be determined using the current trailing 7-day average closing price according to CoinMarketCap, which was $0.1492. Users will need to initiate their one-year OGN lock-up periods by submitting claims on the OUSD DApp. After one year, they will be able to collect their OGN, including the 25% interest.
Here are a couple of examples:
User A held 900 OUSD at the time of the hack. He will be able to claim 900 OUSD immediately.
User B held 11,000 OUSD at the time of the hack. She will be able to claim 3,500 OUSD along with 50,268 locked OGN, which will grow to 62,835 OGN within one year. This is calculated by first allocating OUSD towards the 1,000 minimum, then splitting the remaining 10,000 compensation at 25% OUSD (2,500 OUSD) and 75% OGN (50,268 OGN at today’s price).
We plan to deploy the compensation contracts by mid to late January, and claims for compensation will need to be made within the following 90 days.
Our priority is to compensate users who held OUSD in any form at block 11272254 (immediately prior to the hack). This includes OUSD held directly in wallets, automated market makers (AMMs), staking contracts, and centralized exchanges. We’ve collected all of the relevant snapshots to find everyone’s effective, pre-hack balance. While most people continued to hold OUSD after the hack, others sold some or all of their OUSD in an effort to recoup their losses. This is understandable considering the circumstances. We don’t want to punish these users, particularly considering that some sales occurred automatically on the AMMs. However, we also don’t want to reward this activity by additionally compensating these users when they’ve already recovered some or all of their losses. Therefore, we’ve made adjustments to some accounts based on their post-hack sales of OUSD. This brings us to an “eligible balance” for each account that represents the adjusted amount of OUSD that is eligible for compensation.
Here’s an example of an adjusted account:
User C held 50,000 OUSD and then sold it all on Uniswap for 10,000 USDT after the hack. The eligible balance will be 40,000. Compensation will be paid in the form of 10,750 OUSD and 196,045 locked OGN, which will earn an additional 49,011 OGN within one year. Again, these are calculated by first subtracting the 1,000 OUSD minimum from the 40,000 eligible balance then dividing the remaining 39,000 between OUSD and OGN at 25% and 75% respectively.
Liquidity providers and speculators suffered additional losses in the form of USDT, USDC, and WETH, which were traded for OUSD during and after the hack. We’re unable to offer any compensation for these losses. If you’re currently providing liquidity to an automated market maker, we recommend that you withdraw it.
We’ve made substantial security improvements to the OUSD smart contracts. Trail of Bits is reviewing our fixes for the issues that were discovered during their initial audit. Our contracts are also being audited a second time by Solidified. Once these audits are complete and any additional improvements are made, we’ll be relaunching OUSD prior to the rollout of compensation. All existing OUSD balances will go to 0 at the time of the relaunch. Users who were affected by the OUSD hack will then be able to claim their OUSD and OGN (in some cases) from the ousd.com DApp.
As with most of our product development at Origin, the code for calculating OUSD compensation is open-source and auditable by anyone. We’ve set up a new GitHub repository with all of the relevant Python code for retrieving data from the blockchain and calculating the eligible balance for each account. We’ve also published preliminary results from our calculations and encourage everyone to review them for accuracy.
Verifying your eligible compensation
You can see your OUSD eligible balance as well as your specific compensation in OUSD and OGN terms by checking for your Ethereum address in this data file.
We want to hear your comments on how this compensation plan compares to other recent hacks and your expectations. We have set up a Google Form for you to submit your feedback and any inaccuracies that you find in our calculations of the compensation due to each eligible account. We are excited to move on to the next chapter for OUSD and appreciate the extraordinary support that we’ve received from our users and community.
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