Summary
This proposal seeks DAO approval to take responsibility for covering the bad debt originated from the Credix hack, which impacted stkscUSD. The DAO would progressively repay the outstanding liabilities through a share of protocol revenues, ensuring solvency, user protection, and continued growth.
Context
Trevee Earn had indirect exposure to wMetaUSD that was allocated into Credix. Following the hack, this asset became worthless, creating an initial exposure of $1,600,000. Through active management, the exposure has been reduced to $400,000.
To prevent protocol disruption, Mithras Labs took a $295,000 loan on Wildcat, committing to a six-month repayment schedule. Core contributors also committed 73,000 scUSD to cover part of the debt. In addition, third-party users of the Mithras Vault are involuntarily carrying 94,516 scUSD of bad debt.
Legal action against the rug-puller and compensation from Stability remain underway, with expected RECwMetaUSD claims of around $723,778.40. While partial recovery is possible, the DAO must act to restore protocol health now to sustain trust and enable future growth.
Without DAO intervention, Mithras Labs alone shoulders systemic risk, while the DAO retains ownership of the protocol and its revenues.
Rationale
Mithras Labs acted immediately to stabilize operations, as DAO processes are not designed for emergency interventions. With tokenomics not yet live, DAO assumption of responsibility is now required.
Addressing the bad debt at DAO level is justified by three principles:
-
User Protection – Trevee Earn depositors should not suffer losses caused by an external incident unlesss it is abolsutely unavoidable. Making Trevee a protocol trustworthy and safe is our priority.
-
Protocol Continuity – Mithras Labs can continue building and scaling Trevee without being constrained by debt servicing.
-
Fair Risk Allocation – The DAO treasury manages systemic risks, while service providers handle execution. Any compensation recovered will return to the DAO.
Repayment Plan
-
Total liability: $411 641, including Wildcat loan principal and interest plus other creditors.
-
Expected recovery from Stability: $30k – $120k (5–20% of bad debt).
-
DAO commitment: allocate 50% of DAO revenues into a repayment fund.
-
Repayment priority:
-
Wildcat loan
-
Silo Mithras Vault exposure
-
Additionally, we propose a 10% fee on stkscUSD and stkscETH yield to accelerate repayment.
Voting Options
-
For – DAO commits to cover the bad debt with the repayment plan outlined above.
-
Against – DAO declines to cover the bad debt.
Abstain – No opinion expressed.