2 (DeFi) projects are butting heads over a governance proposition that could see the recovery of 40 Ethereumย (ETH) stolen in Sushiswapโs April hack.
Tensions betwixt two trending decentralized financial (DeFi) projects have reached a breaking point as cryptocurrency exchange Sushiswap and Ethereumย (ETH) staking protocol Lido await the result of a contentious vote to return stolen cryptocurrency to Sushiswap.
Itโs a situation involving a multi- Million dollar hack, a cryptocurrency Twitter battle and weeks of decentralized governance theater. Decentralizedย Finance projects have long faced mainstream skepticism owingย to the prevalence of hacks and the shoddy decision-making of the decentralized organizations that operate them.
Both issues were on full display in recent weeks as Sushiswap began an attemptย to recover funds it lost in a $3.3 Million hack, only to get thwarted by the tricky politics of Lidoโs governing body, LidoDAO. A Second attempt is ongoing, but looks to be headed toward defeat.
Read More: Sushi DEX Approval Contract Exploited for $3.3M
Sushi recovery effort
Owingย to the nature of Sushiswapโs April exploit, the bulkย of stolen funds were directed to a Lido vault contract that automatically distributed it to Lido stakers and node operators. No oneโs attemptingย to claw that money back, but the 40 Ethereumย (ETH) (~$72,000) that landed in Lidoโs treasury seemsย to be the most easily recoverable. Itโs this chunk Sushiswap wants returned.
As a show of support for Sushiswapโs recovery effort, LidoDAO put forth a governance proposal on May 4 to vote on whether or not to return the 40 Ethereumย (ETH) from the LidoDAO treasury to Sushiswap.
The vote saw the bulkย of Lido cryptoย token holders cast votes in favor of returning the funds, but the vote fetched only 44 Million votes, shy of the 50 Million votes required to reach quorum.
On May 18, LidoDAO put forth a Second governance proposal on whether or not to return the funds. The proposalโs voting period closes Thursday, May 25.
Upย toย now, the new vote has seen even less participation โ and the bulkย of voters flipping to โno actionโ โ stoking tensions betwixt the two projects as the prospect of the funds getting returned appear dimmer.
โCode is lawโ or theft?
Followingย the failure of the 1st vote, Sushiswapโs Head Chef Jared Grey took to Twitter to call Lidoโs actions โtheft.โ
โ Unfortunately, as weโve worked with the Lido team to find a way forward to return the stolen funds theyโve disbursed, plentyย of personalities have made the argument Lido has no duty or authority to return them, essentially greenlighting the distribution of stolen funds to numerous Lido DAO participants,โ tweeted Grey.
Grey likewise accused Lido advisor and pseudonymous Decentralizedย Finance user Hasu of leveraging DAO procedures โto obfuscate and impedeโ theย procedure of returning the funds.
Nonetheless, the Lido camp reveals Grey is asย well quick to cast blame.
โ Aย lotย of us feel weโve done everything we can toย assist them in the face of legal threats to fellow contributors, under a situation where theyโve made a series of careless and sloppy mistakes,โ stated a Lido contributor who requested not to be named. โFor them to take such a disingenuous and pointed stance onย Twitterย platform like this is really disappointing to see.โ
The Lido contributor alleged that Sushiswap didnโt properly audit the smart contract that was followingย that exploited and that Grey used misleading language to imply that Lidoโs treasury received considerably more Ethereumย (ETH) than it did. Grey did not instantly respond to a request for comment.
Another twist in the saga revealed that the hacked wallet in the Sushi exploit is Ethereumย (ETH) address sifuvision.eth, belonging to a fund run by pseudonymous cryptocurrency personality 0xSifu. 0xSifu was the treasurer of failed Decentralizedย Finance project Wonderland and was thereafter revealed to be a previous executive of the Canadian cryptocurrency exchange Quadriga, which collapsed in epic fashion in 2019.
Both projects have faced regulatory woes inย theย year, with Sushiswap revealing they were subpoenaed by the Securities and Exchange Commission (SEC) in March. LidoDAO, the decentralized autonomous organization behind the Lido staking protocol, was rumored to have received a Wells Notice by the same agency in March, which a spokesperson for Lido at the time declined to confirm or deny.
Danny Nelson.
