This article will allow you to understand the solution the Dogechain team is bringing for ERC20 $DC holders following the Multichain Bridge exploit.
TL;DR
- The Multichain Bridge suffered an exploit on July 6, 2023, tainting the ERC20 $DC tokens issued by that bridge.
- ERC20 $DC are considered useless/worthless as they cannot be traded on Uniswap or deposited on centralized exchanges.
- The Dogechain team will provide a conversion tool that will allow users and institutions to redeem ERC20 $DC 1:1 for DOG20 $DC.
- The ERC20 $DC will be burned and ultimately deprecated.
- Users get multiple benefits by bridging back $DC on the Dogechain mainnet.
Context
On July 6, 2023, the Multichain Bridge solution was compromised, leading to a large amount of funds being drained from its pools. With little information about the source of the exploit, around $650,000 were drained from the stablecoin pools on the ETH <> DC bridge, on the Ethereum side.
Unfortunately, this left the bridged stablecoins on Dogechain in limbo, and worthless. It was a hard blow to the Dogechain community and the liquidity providers that bridged USDC and USDT on the chain.
Shortly after, Multichain announced that their bridge has been stopped until further notice.
That said, thanks to the vigilance of the team and information shared by the community, we managed to detect the exploit as it was unfolding. This allowed us to act quickly and limit the damages regarding the $DC tokens.
To avoid malicious actors unloading ERC20 $DC tokens on the open market, the team:
- Pulled the token’s ETH/DC liquidity from Uniswap, and bridged them back on Dogechain.
- Requested all centralized exchanges to stop deposits and withdrawals of ERC20 $DC tokens.
To further contain the exploit, the Dogechain PoA validators voted to freeze the Multichain wallet address holding the $DC mainnet tokens. This removed the possibility of Multichain hackers accessing 6.5b $DC on Dogechain.
This has effectively rendered ERC20 $DC tokens untradable, preventing further damage to the Dogechain ecosystem. However, it has also made ERC20 $DC tokens worthless, which requires an additional solution.
Solution
The uncertainty and loss of trust in the Multichain Bridge have put pressure on our team to neutralize the threat at its core. After strong deliberation, we concluded that the ideal solution is to ultimately deprecate the ERC20 $DC issued by Multichain over time.
To achieve this, the Dogechain team is prioritizing releasing a first-party solution for bridging ERC20 $DC on the Dogechain mainnet. This solution will allow holders, both retail and institutional, to redeem ERC20 $DC 1:1 for DOG20 $DC.
Currently, there are 6,555,869,907.73 $DC residing on the Ethereum blockchain. Every ERC20 $DC holder will be able to redeem DOG20 $DC, nullifying any impact of the exploit on $DC holders.
Mechanism ⚙️
- The ERC20-DOG20 $DC converter will be made available on Friday, July 14, 10 AM UTC.
- Users will be able to connect their EVM wallet holding ERC20 $DC and convert them 1:1 for DOG20 $DC
In the process:
- The ERC20 $DC tokens will be destroyed.
- Users will receive DOG20 $DC tokens in the same EVM wallet. To access their assets, they will need to connect to the Dogechain mainnet and import the tokens.
- The DOG20 $DC tokens will be provided by the Loyal Shibes allocation (address: 0xBce77b0d91e98E4524E74Fd378A3af5c9B94528e). No new tokens will be minted in the process.
- To ensure the security of this mechanism, we are unable to do real-time conversion. The reason behind this is to prevent further manipulation by whoever is holding the Multichain smart contract private keys. The timeframe will allow us to detect any additional minting of ERC20 $DC and prevent it from getting converted into DOG20 $DC.
- Consequently, the token distribution will occur once per week, every Friday at 0:00 AM UTC.
- The conversion will be done at minimal costs (ETH gas costs), with no additional fee.
📜 Additional notes:
- The DOG20 $DC will be airdropped to the same wallet that holds the ERC20 $DC tokens. Ensure you have access to the wallet before attempting a conversion. This is particularly important for multi-token wallet users like Trust Wallet or Bitkeep that do not always provide you the same EVM address for multiple blockchains.
- Users will have until 0:00 AM UTC on Friday to request their conversion. If done later, they will need to wait until the next Friday to receive their DOG20 $DC.
- In case we detect malicious activities from the Multichain smart contract (e.g. minting new ERC20 $DC tokens), the service might be temporarily interrupted to deal with the threat.
Community and Holder Benefits
Although the situation is quite unfortunate, there is a silver lining to the Multichain failure. It will push the community to bridge over their assets back on Dogechain, providing them with multiple benefits and use cases.
The ERC20 $DC tokens were bridged at launch to provide better exposure to the asset and reach a larger user base. These tokens always had a single use case as a speculative asset and couldn’t be used in the Dogechain ecosystem.
Use case benefits
On the other hand, DOG20 $DC has multiple use cases, including:
- Securing the chain and staking with validators.
- Receiving rewards by delegating to validators.
- Participating in governance votes.
- Participating in “shark-tank” ecosystem DAO votes.
- Participating in the growing Dogechain ecosystem and increasing the liquidity on the chain.
Seamless CEX and DEX trading
Moreover, major centralized exchanges have already integrated DOG20 $DC in their offering, and already provide exposure to the community. Currently, you can find DOG20 $DC on:
Where you can already deposit and withdraw assets.
For users preferring decentralized exchanges, QuickSwap and Frax provide high liquidity for the asset on the dogechain mainnet.
Burning Tokens
Finally, bridging ERC20 $DC will contribute to burning a portion of the total supply of $DC tokens.
When all ERC20 $DC are bridged, it will ultimately result in a burn of 3.25% of the total supply.
Wrap-up
The unfortunate failure of the Multichain Bridge has made the ERC20 $DC tokens useless. The Dogechain team will provide a solution for converting them to DOG20 $DC and reinstate their usage as a tradable asset. Moreover, it will open additional use cases that ERC20 $DC holders didn’t have in the past, such as staking and voting for governance proposals.
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