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Compensation plan by the Mint Club team for the Nutbox case victims
Before we go into the details, we’d like to point out that 1) this decision was extremely difficult for the company financially and 2) the team’s only goal is to make Mint Club a top main platform for people who want to tokenize without any complications and we will do any measures to achieve this goal.
(Attention, this is a long article, but please read it all to understand our passion to lead this project to success).
The recent crises in Mint Club were NOT caused by us
The first crisis happened on Nov 17, 2021. One whale who had about 77B MINT tokens reported to us that his wallet was hacked and all his MINT tokens were gone. Because he was a #4 ranked whale, the price impact was huge, which led to a sudden drop, but it rebounded very quickly due to the strong community power.
Mint Club had NO fault in this case, but it helped us realise that the liquidity pool of MINT/WBNB was not large enough to support the large size of trading demands. So, we came up with an improvement plan to boost up the liquidity.
The second case came out the day after. What unfortunate timing. The partnering company Nutbox platform had a contract leakage and about 173B MINT tokens in total were hacked from the Nutbox contract. The funds of our beloved users’ (including the funds of the team members) that were staked in Nutbox were lost due to this incident.
When we partnered with Nutbox, we completed all the possible analysis on Nutbox’s contract, and could not find any security issue and they also went through the CERTIK’s security audit.
However, this incident seems to have resulted from the key leakage of the wallet that has an
DEFAULT_ADMIN_ROLE (many famous DeFi platforms also have admin functions to protect the fund in an emergency situation). Unfortunately, this incident resulted from their failure to properly manage the Default Admin Role.
(This incident will never happen to the Mint Club smart contract because it does NOT have admin functions that can affect underlying assets.)
In summary, the Mint Club project got two attacks in a row, which were no fault of ours. Both our users and company/project suffered a huge amount of damage.
Discussions with the Nutbox team to come up with the compensation plan
This crisis resulted from Nutbox's contract management failure, so we strongly believe that the Nutbox team should proceed with proper follow-up measures as soon as possible to compensate for the loss. Fortunately, the Nutbox team is cooperative and they are trying to come up with a compensation plan as soon as possible. Let’s wait to see their announcement soon.
Is that the end?
Of course not. Even though the platform of Mint Club has no fault, our beloved and supportive Mint Club users lost a huge amount of their fund from the Nutbox staking pools. Our main priority is to lead this platform to ultimate success, not to deliver decorative words. So, the Mint Club team should do something to make the people who staked their funds on Nutbox continue to be our strong users/supporters.
The following measures were discussed so far:
1. Compensate the loss from the company’s holdings of MINT tokens (we’re NOT choosing this option)
Remember that there were no token sales and no free team allocations when the MINT token launched. The company also swapped their HUNT tokens to earn MINT tokens during the pre-sign up period, and about 222B MINT tokens are set for the business development purpose on the company wallet.
So, technically we could compensate for the loss by using the company’s holdings of MINT tokens. However, we decided that this option should NOT be taken for the following reasons:
The company needs MINT tokens for the upcoming funding, partnerships, listings, and many other business development purposes to drive this project. Without the MINT holdings, the growth could be limited.
(More importantly) this compensation plan may have a negative impact on the short-term MINT price due to the large amount of token distributions. MINT token price has already dropped due to the recent incidents, and we don’t want to make any further price challenges.
So, we will NOT take this compensation option.
2. Compensate the loss from the Nutbox team’s support
We’re still under discussion with the Nutbox team about their compensation plan. Let’s be patient and wait until they come up with some feasible plan for us. To stay tuned with the news, we recommend you join their Telegram channel.
++Updated after the announcement
Here is the Nutbox x Mint Club Staking Pool Compensation Official Announcement, including Nutbox compensation plan. After careful discussion, Nutbox team have decided to give out 20% of the total NUT held by the team (i.e. 20 million NUT) to compensate users who have lost their assets in this incident.
3. Compensate the loss from the company fund (not MINT)
Frankly speaking, we’re not a rich company so it’s not easy to solve this case perfectly. This project is in the very early-stage and we did not run any fundraising when we launched this project. However, solving this issue as best as the company can do is highly important for us to keep driving this project even though the recent incidents have NOTHING to do with the company and we have NO fault.
So, we’re going to use all possible cash funds that we can prepare (including the founders personal money) to come up with a meaningful cash compensation. We think we can gather up a maximum of $1 million worth of BNB tokens to prepare for this compensation to be shared by Mint Club users who staked in Nutbox. This will not amount to the full compensation but it's the absolute maximum we can afford. Also, please remember we have NO fault and NO responsibility in this matter but we are doing everything we can to maintain the strong support of our wonderful community.
We will come up with the claim interface as soon as possible for the victims from the Nutbox staking pool and distribute the compensation fund as BNB tokens based on the proportion of each victim’s share of the total lost fund (it won’t amount to the full loss, but it will be shared in a proportionally fair way). More details will be announced as soon as we’re ready to open the claim interface.
Last words (please read)
Again, the recent two cases were NOT the company’s fault. The security level of the Mint Club protocol is relatively far higher than other smart contracts because 1) the script and structure is super simple and 2) the contract has no critical admin functions, meaning that NOBODY including the team can withdraw the funds from the contract. So, please do not spread any FUD. There is no rug pull, no security leakage from the Mint Club protocol, and no company moral issue. Both crises resulted from outside of the company/protocol, so technically there are no obligations for us to compensate. However, the victims are highly important initial users for Mint Club and we need them to keep maintaining this growth together. This is why we’re trying to use all possible cash that the company has in order to compensate for their loss without harming the MINT token price. Please support our initiatives and the vision of the Mint Club, the place where anyone can tokenize with just an idea.