Response to extraBalance Eth redemption

vincgahvincgah Member Posts: 6
"What will TheDAO do with the extraBalance when it shuts down? self.TheDao

[
–]Lorix_In_Oz 5 points  
This will be a complicated issue, especially if people who bought tokens at a higher ETH cost have already traded them. They could either:
Try to return it to contributors who paid the higher price if they can be traced
Proportionally split it up between all token holders according to the number of tokens they have
Donate it to the Ethereum Foundation who helped recover from the hack
Use it to establish an independent group to develop, THOROUGHLY TEST and ultimately deploy a DAO 2.0 framework that avoids the problems this first one had


Source:
https://www.reddit.com/r/TheDao/comments/4oj5yv/what_will_thedao_do_with_the_extrabalance_when_it/?st=iqvwgbp3&sh=0a827126

Edit: I know this is a bit long, so even if your not interested in the extraBalance eth, suggested places of where to post this, other than here, would be very much appreciated. Thanks!

Response:
This is an easy fix.
There are two basic situations:
1)All the DAO tokens are sitting in the account of origin.
2)Or DAO tokens have been spent/moved/transferred from the account of origin.

I'm working under the assumption that it can be viewed which addresses purchased extrabalanced eth dao tokens and for what price.

For situation 1, negligible resources need be expended to figure out how much extraBalance eth originated there.
Therefore they can be simply returned to the origin account.

For situation 2, the tokens that were transferred away from the origin address concluded with 3 basic scenarios: (of which any combination of these 3 situations can be realized)

Point 1 of situation 2) The origin account simply transferred them to another account of the same owner
They can readily be transferred back to the origin account; therefore without question, given a time window to return theDAO tokens back to the origin account, it should be sent its share of extra balance eth

Point 2 of situation 2) The origin account transferred them to another account not controlled by the same owner
You paid another account the dao tokens at some agreed upon market value that you were willing to take the risk/trade-off of. Therefore you already forfeited your expectation of any further returns of value from those dao tokens. You should expect no extrabalance eth represented by those theDAO tokens that were “spent” to be returned to the original account. (This in particular applies to people who traded at an exchange)(Also burnt or lost tokens fit into this category/situation.)

Point 3 of situation 2) The origin account transferred them to another account of someone known by the original owner, and/or that the original owner can establish a line of communication with them
You may have purchased these tokens on behalf of someone else and sent them to their own accounts, they may have been gifted, or they may have been spent.
For this situation it should be pretty easy to create an agreement with the 3rd party to send the dao tokens back to the origin address within a specified time window to retrieve all extrabalance eth that can be represented by these dao tokens, and then after the fact with said persons own resources divide the eth out accordingly [this obviously includes point 2), but work has to be put in on the account origins part only and they could agree to split the proceeds of the extrabalance eth]

For point 3 of situation 2, it can be seen where perhaps the original dao tokens are not able to be sent back, but the dao tokens of another origin are able to fill the balance of a different origin account to its original dao token balance. In this case, the calculation isn't worth it and should be given the benefit of the doubt and just credited. It can also be seen that this situation just described happens, but additional the dao tokens are added to an origin address in excess of the original cration/purchase amount. In that situaion, the dao tokens above the original purchasing balance should only be credited in a 1:100 ratio because it should be assumed they were purchased from another entity that created them with the expectation that no matter how they originated they could only be redeemed for ether at a rate of 1:100.

The only extrabalance eth that should absolutely not be refunded is those that were redeemed by a non origin account because a risk/trade-off decision was made to redeem those at a rate of 1:100. Unfortunately for those those that had all their dao tokens still but redeemed their eth from a non-origin account they owned, maybe there is nothing we can do. Or maybe if they prove they have the original accounts private key along with the private key of the account they did the redemption with, there is something that can be done, and maybe it needs to be done by a time line.

For people that bought dao tokens at different rates of extrabalance eth in the same account of origin (even if they bought some at the 1:100 ratio in that account as well), their extrabalance eth should be redeemed in the order starting with the worst ratios of purchase to best. For example, if satoshi bought 10 dao tokens at the worst rate, 5 at the next best, and 20 at the 1:100 ratio, and only was able to bring 17 back for redemption, the corresponding extrabalance eth for the 10 at the worst rate should be filled first, then the corresponding extrabalance eth for the 5 amount should be filled next, and the last 2 should be redeemed at the 1:100 rate.

One other situation is that someone already redeemed at a 1:100 ratio prior to the extrabalance being divvied out of which they were due some, but as long as they were redeemed in their account of origin, I don't see why there should be any problems for them still claiming their extrabalance eth.

In conclusion:
For extrabalance eth, allow the dao tokens to be sent back to addresses of origin in order to reclaim their corresponding share of extrabalance eth equivalent to the rate at which those the dao tokens were purchased up to the total balance of any given purchase rate of that address. Any excess balance to the original purchasing balances will only be claimable at a rate of 1:100 because these theDAO tokens would have been purchased or traded with only the expectation of being only able to reclaim the corresponding eth at a 1:100 ratio.

There is no reason theDAO token buyers who paid a rate worse than 1:100 should have less entitlement to their original eth than 1:100 purchasers. If this statement holds true, then all of the above applies without question, and the only extrabalance eth that are up for debate as to what to do with are those that are not claimed via residing in origin accounts at the end of the specified time window (if their needs to be a time window). It all comes down to can the dao tokens that corresponded to extrabalance eth rates make their way back to their accounts of origin (or possibly even, could those that redeemed with an account of non origin, prove they own the private key to both)?

In reference to the original post I am responding to (located at the very top inside the quotes): 1 more option exists in addition to Options 2,3, and 4 from the post, and that is to create a smart contract in which all original theDAOtoken holder addresses can vote as to how these funds are divvied out. We will call this option 5.

Options 2 and 5 make sense under the view theDAO was owned by all theDAO token holders and its actions should be determined democratically by its token holders. An argument against 3 is that they had a realizable benefit in helping this first massive dao anyway, and it wasn't just them that retrieved them, it was also the majority that came to a consensus to run the hard forked version. An argument against 4 is we have a decentralized, democratic system like never before so, why would we leave it to the decisions of a few, when we can leave it to the decisions of the many via a smart contract (whether only original theDAO holders or not). Also, presumably the only people with a voice as to what to do with those funds would be the ones that already fucked up. It would be in bad taste because the only profits that came out of this would go to them, without any kickbacks to those whose money was lost. And lastly just because the voice of the extrabalance eth is harder to be heard since they are the minority, we should put no less effort in to returning all of their funds as well.

Questions:
Would there even need to be a time limit on that contract? If this can all be managed by a smart contract that requires no resources from anybody once its set up, then maybe it wouldn't matter if this process was open for redemption indefinitely.
Sign In or Register to comment.