Onyx Community Worried About Mass XCN Withdrawal Post-Hack

The liquidity market stakers have yet to reach a consensus on the best strategy for addressing the consequences of the November 1 hack.

After four rejected proposals, community leaders are hopeful that the fifth offer will be accepted.

Onyx, a cross-token liquidity market, appears to be stuck in an ongoing quest to find the best solution for its recovery after the November 1 hack, when the Web3 project lost over $2 million.

Following the rejection of the first two proposals for the reimbursement plan, which presented the community with a choice between using the DAO treasury for hack compensation or relying on Strike Finance, ready to take over the protocol, the DAO leaders introduced the third offer. This proposal was centered around the utilization of the XCN DAO to address financial issues while preserving the Onyx brand and XCN token. The plan proposed reducing inflation, adjusting staking rewards, winding down lending markets, and implementing measures for sustainable yields.

Read also: Onyx Community Tries to Save The Project with New Proposal

The rejection of the previous proposal prompted a new one from the Onyx community. Despite seemingly strong support, it was also defeated on November 25, with six addresses voting in favor, totaling 64.69 million votes, and eleven addresses voting against, surpassing 250 million votes.

Subsequently, the Onyx team proposed another plan, suggesting the launch of Onyx v2 with a focus on primary markets. The proposal aims to maintain current staking rates to incentivize governing XCN stakers. At the same time, the strategy suggests redeploying the NFT money market in v2 markets, with only ETH, WBTC, USDC, DAI, and USDT lending markets available and continued support for the three NFTs.

Onyx Proposal 5
Source: Onyx

Although the proposal has already garnered support from fourteen addresses with a total vote count of 250.38 million, with no votes against it so far, some members of the Onyx community have expressed concerns about the absence of a clear reimbursement plan.

"A snapshot will be taken as the v1 winds down to capture user balances and create an ongoing recovery plan. These high-revenue building assets can help with the ongoing recovery plan," the proposal explains the recovery strategy, adding that "a streaming recovery plan to help the v1 community" will be created after the launch of the protocol v2.

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

In addition, certain community members expressed their mistrust, voicing concerns about a substantial withdrawal of almost 500 million XCN, valued at nearly half a million dollars at press time. This withdrawal occurred two days after the hack, prompting worries among Onyx investors regarding the potential unauthorized withdrawal and subsequent liquidation of assets. The withdrawn XCN was divided among multiple wallets and subsequently moved to exchanges for sale.

"Whales staked or supplied XCN much before the hack, and after they knew about the incident, they withdrew them from the protocol as they were confused about whether it was safe to keep tokens staked," the DAO leader Alex explained.