We are now 3 months past the Cashio Exploit. It is time for our community to assess and provide feedback on our plans to make everyone whole. We would also like to put a special emphasis on the potential to flip the current Saber Wars incentive structure on its head.

While we’ve been able to convince the exploiter to return some funds (approx. $15m out of $40m claimed by users for refund via our verification tool) there is still $24.5m in outstanding refunds and $25m in the exploiter’s wallet. Unfortunately, since we made our offer to the exploiter to keep the remaining ETH as a white hat bounty - the price of ETH has plummeted leaving them with <20% of the bounty they could have claimed just a few weeks earlier.

Because of this fact it is unclear whether the funds will be returned - we have been focusing intensely on what we can do with the resources we could gather to provide a system with the highest probability of succeeding in making victims whole in a sustainable manner while the exploiters decide to do the right thing or are brought to justice by the authorities on the case.

At the same time, we’ve entered an extreme bear market with L1s, large stable coins, and mostly everything else crashing. Although this is unfortunate for most of us in the space, it highlights the need for diversifying sustainable, low risks investments & stores of value.

Furthermore, within the Saber Wars there is a clear problem of mercenary farming where the $SBR token is currently only serving the purpose of being a reward/dumping token, since retail rarely votes (or cares about votes on gauges) compared to protocols.

With all that being said, these are our goals to achieve with this revival:

  1. Create sustainable rewards for victims with unbounded upside but limited downside
    1. Will be implemented using call options on floor price
  2. Provide locked, deep liquidity to other stable coins through our neutral base pair & lock the liquidity using the veToken mechanics on our governance(”Treasury”) token (which acts as a sink for the base pair & distributor of value from the system using a floor price mechanic).
    1. In order to get rewarded or access governance using our token, you need to stake for a minimum of 7 days or maximum of 5 years. Staking for 7 days gives you a 1x vote for every token and 1x rewards, 5 years may give something like 10x vote and 10x rewards but you can not withdraw your token until the 5 years are over. This honestly might be a mechanic that lends itself well to the purpose of increasing the floor over time & by locking the token the circulating supply will not have extreme fluctuations - leading to more stability in price & rewards.
  3. Remove SBR from circulation & reformat incentives around voting on gauges controlled by the SBR in our protocol earned from the deposited collateral and the Saber Grant
    1. Long term vision: In a not-so-distant future SBR rewards will dry up, and meanwhile it will probably linearly keep decreasing in price according to the increased supply and stagnant (at best) demand. If nothing is done people will just move their liquidity elsewhere, and SBR will not be able to guarantee liquidity for tokens on their platform. Mercenary capital is a short term solution, but in order to create something more sustainable we can transition the current system to one that transfers the value in the system differently altogether. When SBR is out of the picture, people will still have an incentive to lock their liquidity in Saber because of the fact that theres other things they can do with the LPs from Saber beyond farming SBR. They could mint our stablecoin, then either use it to supply liquidity on base pair pools (giving Saber $2 of TVL for every $1 in our protocol) or to purchase our governance token to control the rewards across pools (in the form of call options on the floor price of the governance token they just bought and locked for 7 days - 5 years). Depending on how long they lock they will be providing secure liquidity from the collateral for longer in return for a greater share of the portion of rewards given to lockers, and a greater control over the portion of rewards given to liquidity pools via gauges.
    2. Users used to have only 1 option to use their CASH: farm it against other stables or COW. Now they will have another far more attractive option: Use some of the CASH (or unnamed Stablecoin X in our case) to purchase the governance token that controls the treasury, which consists of growing amounts of SBR, SUNNY, and 2SBR (stablecoin LP rewards). All of these yields are providing value to the Treasury Token (which is the governance token) that votes on the permlocked SUNNY/SBR and receives liquidity constantly from the 2SBR fees paid out from Saber. On top of this it is fully backed by Stablecoin X and can only be accessed by purchasing with Stablecoin X.
    3. If there is 10% of the veSBR locked in our treasury, our governance token as a whole has the monetary vote value of the 10% of 7m SBR emitted each week since it will control where 7m SBR are emitted. If only 1 Treasury Token is sold, it will control 100% of the 700k SBR and decide which pool it will be rewarding. In the future, the rewards will eventually flow from the SBR towards call options on the Treasury Token, which are funded by Saber fees & issue rewards across Saber stable pools. These call options will mostly go towards the remaining CASH victims, until they are made whole, with the rest being sent to veTreasury Token lockers. Once victims are paid that portion would go towards Saber pools.
  4. Utilize low risk investment/ store of value primitives that can still facilitate risk speculation
    1. Contract quotes prices according to a curve that limits price impact while allocating significant amount of liquidity to consistently growing the floor. When the price is much higher than the floor it is harder for the floor to increase but the market price will be well supported in the case a large portion of the supply is sold.
      1. At the same time, the collateral will generate % of its size in LP fees which will be paid out by adding it to the price supporting liquidity of the Treasury Token - supplementing the liquidity gained by selling tokens.

In order to bootstrap the voting, the Saber Team has agreed to Grant the revival project their team’s Liquidity Reserves - which is approx. $13.6m worth of SBR at a SBR price of ~$0.016. This will be distributed over the course of 13 months (until jul 2023) with 3 months value released at launch, then the rest linearly after 3 months. This will bootstrap the gauges with permalocked governance power, and the only way to capture that governance power is to purchase our Treasury Token which in turn (1) creates more governance power (SBR/SUNNY) for the system to generate from deposited collateral used to purchase govToken, (2) generates LP fees from collateral (in the form of stablecoin LPs) which are converted to price supporting liquidity, (3) captures the excess of the market price and floor price to increase price supporting liquidity even more - and eventually trigger the floor to increase.