Onyx Community Tries to Save The Project with New Proposal

Interest in the Onyx project has significantly declined since the hack, and many XCN investors seem reluctant to participate in discussions regarding the reimbursement plan.

An onyx stone
The three proposals for Onyx’s reimbursement plan, aimed at mitigating the consequences of the recent attack, have already been rejected.

The cross-token liquidity market Onyx has still not established its final reimbursement plan to address the aftermath of the November 1 flash loan attack, resulting in a loss of nearly $2.1 million.

The initial two DAO proposals for the recovery plan were rejected by the community. The first proposal suggested utilizing the $40 million XCN token from the DAO treasury and collaboration with LDA Capital, while the second proposed an acquisition of Onyx by Strike Finance.

Many in the Onyx community found both proposals unacceptable which led to the introduction of the third proposal following discussions with the DAO’s leader, Alex.

Read also: Onyx Community Rejects Proposal for Protocol Acquisition by Strike Finance

This strategy was focused on leveraging the XCN DAO to address financial challenges without giving up the Onyx brand and XCN token to Strike Finance.

Onyx's third proposal voting results
Source: Onyx

The key elements of the third proposal involved reducing inflation, adjusting staking rewards, winding down lending markets, and implementing measures for sustainable yields and lower XCN inflation. Notably, it recommended a significant decrease in staking rewards, reducing the current 40% APR to a floating 10%, to lower XCN token staking by over 30%.

While this proposal garnered more support than opposition, with twelve votes in favor compared to six votes against, the latter held nearly twice the voting power, resulting in the proposal's defeat on November 21.

Read also: New V2 Money Market Protocol May Help Onyx Recover from Hack

As promised by Alex, the Onyx investors now have the opportunity to vote on the fourth proposal, outlined by the community member Tristanman. This strategy, described by Tristanman as "taking the best of both proposals 1 and 3," introduces key differences from its predecessors:

  • It revolves around a more moderate decline in inflation for XCN, aiming to enhance Onyx's future competitiveness;
  • It advocates for directing all revenue into XCN, transforming it into a self-sustaining protocol. This strategic move is designed to increase the appeal of XCN to investors;
  • It utilizes the Onyx Capital Facility to ensure that users are fully compensated, fostering faith and trust in Onyx and minimizing selling pressure to enhance the overall desirability of XCN.

Meanwhile, Alex expressed his concerns about the rather low engagement in voting. "The community rejected three proposals, and total votes were below the quorum. I want to understand the reasons for such low user involvement. There could be a situation when all the proposals will not pass," he commented in a post discussing the fourth proposal.

This comment sparked criticism among some of the community members who believe that growing investors’ frustration is caused by the significant drop in the project's value, from $0.12 to $0.0008 in just 1.5 years. They also noted an absence of organic discussions about the project on social media platforms, where only visible discussions are initiated by paid bots, and any questions about the project’s transparency are banned. Some community representatives argue that the remaining participants are primarily "bag holders" who have experienced substantial losses.

On top of that, the community is also rather unhappy about the team’s decision to allocate a part of the funds for their own rewards instead of using them for the project audit.

At press time, only four addresses have participated in the voting process.