Community discussion: pBTC-on-BSC Compensation plan, Proposal 1

Community discussion: pBTC-on-BSC Compensation plan, Proposal 1

As a community, we have long-term goals for pNetwork: this is the main pillar this first compensation plan draft proposal is based on. This draft proposal aims to find solutions that recoup value for pBTC-on-BSC holders while maintaining value on the project for the pNetwork community.

This specific compensation plan proposal aims to:

  • recoup most/all the value lost by pBTC-on-BSC holders
  • convert creditors into pNetwork stakeholders and potentially long-term users, node operators, supporters
  • increase the number of pNetwork nodes, geographical distribution and overall network size
  • set the basis for pNetwork’s organic growth in terms of TVL and volumes to continue

In brief (non-exhaustive overview), the Compensation plan, Proposal 1 is formed of three main steps:

Step 0 - It consists in an airdrop of the DAO rewards of the ongoing Epoch to pBTC-on-BSC holders and Ellipsis LP holders. This will grant them the possibility to contribute to the pNetwork DAO (meaning, have a say in defining their preferred compensation plan without forcing them to buy PNT tokens) and provide an initial partial compensation.

Step 1 - pNetwork issues 1,000 NFT tokens to partially compensate pBTC-on-BSC holders of the lost value by creating new value which currently isn’t captured. This enables pBTC-on-BSC holders to access extra upsides that they hadn’t previously access to.

Step 2 - pBTC-on-BSC becomes pBTCv1-on-BSC. APY rewards for pNetwork DAO members get partially redirected to pBTCv1-on-BSC holders (based on real-time holders) as unlocked PNTs over a period of 10 months. This would still grant a 10.5% APY for DAO voters over the next 10 months.

A more detailed explanation of the Compensation plan, Proposal 1 is available here. Please read it carefully before commenting below as the summary above is non-exhaustive.

The steps forward are ultimately a community decision, not a team decision. It is our intention to preserve long-term value in pNetwork and we feel like a critical component to do that is enabling the parties involved to share their feedback and their suggestions.

This forum topic serves as a starting point for a community discussion. Read the entire compensation plan proposal here.

From the team, we are committed to making this right for those negatively affected by the event. We are committed to the industry and continue building innovative products. We want to thank everyone who supported us during this difficult time and are committed to going back stronger together.

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My opinion on the current proposal:

  • step 0: As a daomember I would agree with this but only under the condition that the daopnt redirected to pbtc holders would be locked for 1 year. This would give them the right to vote and participate in the dao without actually liquidating the pnt instantly. daopnt holders would give their cut away to pbtc holders, hence they should be protected from an immediate drop in price.

  • step 1: Very good idea and certainly support it. 2 things I would change for this step:

  1. Make the 16% cashback linked to the nft itself as opposed to a separate voucher that can be traded. Gives more value and utility to the nft itself and keeps things simpler.
  2. Keep the entire sale on the binance smart chain, as opposed to phase 2 on ethereum.
    Why?
    -ethereum fees are outrageous and nobody benefits from an ethereum gas war
    -the hack actually occured on bsc, and the only token affected is pbtc on bsc. The nft sale will create enormous buying pressure on pbtc, which will get pbtc closer to its peg. If the entire sale is done on the bsc, more pbtc would need to be bought on bsc hence creating more buying pressure on pbtc, getting it closer to (or even above) its peg of 1btcb. This would all depend on the popularity of the nft, but since it’s backed by an actual asset and would give the rights to run a node, there could be quite some demand for it. Running the auction on ethereum will not create the buying pressure for pbtc on bsc, hence missing out on restoring the peg. Quite some community members on telegram have expressed the same opinion on this matter as well.
  • step 3: I think this is acceptable, let’s see what daopnt holders think about it when the vote launches.
3 Likes

I have lost 2.15 BTC from this incident. I deposited to Elipsis few days after the incident as one of their page only showed tiny warning triangle sign and with the “add” button available. I didn’t click on the tiny triangle and I was trapped by their irresponsible webpage design. When I was aware of the incident, I withdrew as pBTC and swapped back to BTCB to cut my loss. I hope you are taking the snapshots even though it is few days after the incident. I am a victim and I hope I am covered by your compensation plan.

PNT price assumption of $1.15 is WRONG.

At the time of the hack, BTC was at $47k, and pBTC was freely trade-able at this price, so it is correct to dollarize the loss assuming $47k for BTC. In spite of this, I am ok if we assume BTC price is $43’500 as it is today at the launch of the Compensation Proposal.

The assumption that PNT is worth $1.15 over the next 10 months because that is what the price was at the time of the hack is very wrong. PNT sold off to $0.85 immediately after the hack, and no-one had the chance to hedge this risk. Only later you decided to dollarize the loss and pay back over time with PNT.

The correct PNT price assumption should be the current $0.86 and the BTC price assumption should be $47’000, but I am ok if you take the BTC price to be $43’500.

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I would at to your point on step 1.

Can we find a way to ensure that the first NFTs are made available to those who held at the time of the exploit, or were in the ellipsis pool have first refusal on these. Maybe to a maximum of 500? It would be interesting to also knowthe total holders.

A telegram poll to gauge interest might help to better understand.

Perhaps then any remaining could be auctioned, and as @bavibull says for pbtc on the BSC.

What about Binance Smart Chain ? Seems they were also part of the mess . Why pNetwork should pay all the losses ? We all know that BSC is a scam and users who decided to invest there should also be responceble for their own greed . Stay on Ethereum ,it is expencive but is safe .

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Thank you all for your comments and suggestions. Below are a few additional points for consideration reiterating your proposed changes.

Re the NFT sale. Below is a recap of how this would work as per the proposed plan and a clarification on how this contributes to compensating pBTC-on-BSC holders.

NFT sale on BSC only (phase 1) - this aims to create demand for pBTC-on-BSC by people who are interested in accessing the NFT. As a consequence of increased demand of pBTC-on-BSC, the slippage on the Ellipsis pool would reduce and contribute to a better balance between pBTC-on-BSC and BTCB in the pool. At this point, there would be A) people who convert pBTC-on-BSC to BTCB (at a better pBTC/BTCB ratio) and B) people who buy pBTC-on-BSC to access the NFT sale. The pBTC-on-BSC collected from the NFT sale on BSC are burnt, hence contributing to reducing the debt of pBTC-on-BSC for up to $ 4,600 x 500 = $ 2,300,000.

NFT sale on Ethereum (phase 2) - this serves as a way to both:

  • collect proceedings from the NFT sale that are used to partially replenish the pBTC-on-BSC collateral with underlying BTC. In the case where the NFT sale Phase 2 is sold out at the starting price, this would contribute for an amount equal to $ 6,900 x 500 = $ 3,450,000 (this could potentially be more should some pieces sell higher via the auction model).

  • enable people who got the discounted NFT during the BSC sale to potentially resell their NFT. This contributes to additional compensation for those who joined the NFT sale early.

(cc @bavibull) You are correct and have a point in saying that this could be all done on BSC. The reason why the proposal includes a second phase on Ethereum is based on the assumption that availability of the NFT on the biggest NFT marketplaces contributes to a more successful outcome for the sale itself. According to external ratings, the biggest NFT marketplaces are currently on Ethereum. As per dappradar.com statistics, OpenSea provides for an NFT market that is significantly bigger than the biggest BSC one (PancakeSwap) counting 256,000+ unique wallet addresses interacting with the dapp smart contract in the last 30 days with $ 2.5+ Billion in volume. Opening the NFT sale to a more exclusive market first (pBTC-on-BSC holders) and then significantly decreasing the entry barrier on a much larger market, is expected to contribute both to higher buying pressure during the first phase of the sale and to attracting a larger audience during the second phase of the sale.

Re the PNT price assumption. (cc @avirap) The price assumptions part of the compensation plan proposal assume that both BTC and PNT prices are taken at the time of the attack. Specifically on the PNT price, this means 1 PNT = $ 1.15.

This assumption could be changed for a different PNT price to be considered (changing the assumption would imply a complete revision of the compensation plan proposal), should the community propose a formula for calculating what price to apply that is considered a fairer option.

Looking at the PNT price over the past 6 months, the average price is 1 PNT = $ 2.57 therefore showing that there is a market for PNT at prices higher than $ 1.15 proposed. Additionally, the average price during the past 30 days is 1 PNT = $ 1.18 therefore backing the $ 1.15 price assumption as a reasonable proposal.

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Thanks again for the detailed reply @bertani My main question is how we can guarantee those affected initially, not those who purchased after the event, can be guaranteed a chance to purchase an NFT. Could there be some kind of pre-sale with qualifying wallets?

Thank you for your communication.
I ha ve a question, ellipsis lp holders are concerned by the step 0. For the others steps, ellipsis lp holder are beneficiares too?

Maybe I’m not understanding this correctly, but it seems the current node operators are taking the biggest hit out of everyone. Not only is the staking incentive reducing by 50%, but then the already low tx fee pool is going to be diluted by potentially 1000 more nodes. With the current profitability rate, and even if the distribution process was made more efficient, the nodes would be earning pennies and is in no way attractive.

The majority of this solution is based on speculation that transaction fees will increase, and the other side of it is taking away from the actual pNetwork supporters who have been staked in the DAO, all to pay back BSC users.

You’d lose support of the current node operators, who all own 200,000+ PNT, and the other members staked in the DAO, cause a massive sell-off, and plummet PNT into the ground. And having some device that earns pennies each month, in no way makes up for this loss.

Again, maybe I’m not understand this correctly and some clarification can resolve my concerns.

Thank you for your comment Jeremy.

As for the DAO rewards reduction, this would impact everyone proportionally to their stake. I understand this is not pleasant, but since the beginning the purpose of the external incentive has been to benefit the growth of the pNetwork ecosystem. While reducing the direct gain for DAO members, there is the expectation for such an action to overall impact positively the ecosystem by bringing forward a compensation for those affected by the attack (hence regaining confidence also for future potential users of all bridges).
As for node rewards, while the proposal includes the sale of 1,000 NFTs, I would expect only a part of those to be actually used for starting a node (the remaining being exchanged on NFT marketplaces). Regardless of the number of nodes that are actually started, as per the proposal the node rewards would continue being distributed based on the amount of daoPNT at stake, meaning node operators with 200,000+ daoPNT would get a bigger slice proportionally to the amount they have at stake.

I understand this would affect short-term rewards for node operators, but in the opinion of the team the proposed numbers were a reasonable compromise towards a feasible way of recouping value for pBTC-on-BSC holders while maintaining sufficient value for DAO members and node operators. However, the proposal is here for discussion so if you’d like to propose different numbers or a different strategy, that’s the time to do it.
For example, there is another forum discussion opened by a few pBTC-on-BSC holders that proposes an alternative compensation plan that would redirect 80% of all node rewards towards pBTC-on-BSC holders while also redirecting any additional potential future fee stream to pBTC-on-BSC holders as well. It is my opinion that the proposal from the team would be more balanced compared to this alternative one, so you may want to check that out and comment on that one also.

To further increase the value of the NFT and to avoid a sell off after the loss of the black status after one year I would like to propose an extension possibility for the status. For example:

  • next few month + 2022: black status just for holding one NFT (4.000 PNT)
  • 2023: black status for holding 2 NFTs in your wallet + 6.000 additional PNT (14.000 PNT)
  • 2024: black status for holding 3 NFTs in your wallet + 12.000 additional PNT (24.000 PNT)
    either go one from here or stopping this programm than as another 5.000PNT will provide interested guys with the vip+ card than that has interesting benefits and a relevant income from the light node (one NFT needed for that): 1 NFT in your wallet + 8.000 PNT from burning 2 NFT + 17.000 additional PNT
    This will lead to a buy pressure from interested people and to new long term holders as the setting is necessary to keep the card and the light node with relevant size.

Another possibility would be to offer different types of NFT:

  • no card, just light node: 4.000 PNT
  • 1 year card + light node: 8.000 PNT
  • 2 year card + light node: 12.000 PNT

    They should be redeemable for PNT just after the card time so after 0, 1, 2, … years.

Hi All,
the proposal is a huge effort from the Team but quite complex to understand.
I would recap it like this (high level recap):
1: redirect half of the remaining DAO rewards to the pBTC holders
2: Introduce the right to run a node through an NFT; this new model will allow anybody with the NFT and AT LEAST 4k PNT to run a node; node fees distribution will then change, being PROPORTIONAL TO THE STAKE, this will compensate pBTC holder as:
a. they will be able to receive the right to run a node, valued 2300$+, as a GIFT, being able to buy the
corresponding value of PNT (4k) with pBTC at the value of pBTC and PNT at the moment of the hack,
embedded within the NFT
b. they will benefit from the additional auction of NFT on ethereum (revenues are uncertain), whose
funds will be used to rebuy the pBTC at the defined value.
c. for those holding a NFT, they can also obtain rewards from running a node
3. Additional form of benefit, those having the NFT will also get access to a block eidoo card with 16% cashback.

While this proposal has some extremely good ideas in it, it has also some problems: it requires the pBTC holders to get part of the DAO and the pnetwork themselves to really get entirely covered, which for many is not of any interest. It also requires long term trust in the Project, which is in contrast with the feeling one may have immediately after an event like this. Finally, the ability to cover the 277BTC is hypothetical. The Project needs to find a way to stay alive, with the support of DAO members, investors and node operators.

My suggestion is the following: do several auction of the NFT targeted at ANYBODY who might be REALLY INTERESTED in the node, doing proper advertising to obtain good participation. This will lead to sell the NFT to people which really want to run a node and are willing to give proper value to the NFT. Add the temporary black card to make it more interesting, @aethen 's proposal are interesting too.
With the revenues, buy back the pBTC v1 at the fixed conditions.
If the auction is not covering the entire loss (likely), add a fixed tax (0.05%?) on any transaction to build a treasury to buy back additional pBTC v1 until they are around.

Additional comments:

  • It’s seems to me easier as the pBTC holder just need to sit and wait until they can sell their pBTC.
  • There are still problems, like uncertainty about the period required to fully cover the loss
  • This might lead to higher rise in the price of PNT as people REALLY interested to run the node are interested to increase the PNT stake too; enabling more and more people to run a node will probably make the DAO stake grow
  • This won’t have any benefit for the “full node operator”, which are anyway widely damaged by any proposal - main compensation for them is the rise of the PNT price - or many black cards (laughs)
  • It might even happen that the NFT sale go extremely well and other measures can be mitigated.
  • 6900$ is the starting price of the auction, from my estimation this means 4-7% base APY if the stake is not increased while, if you increase the stake, tha gain increase less then proportionally. PEOPLE NEED TO LOOK AT THE ROADMAP ASAP AND BELIEVE IT. pNetwork/Eidoo ecosystem growth with expansion on L2, easy in wallet funds move across sidechains and L2, low cost card top up, L2 bridging or routing etc. might really people to take decision in favor of the pNetwork DAO and pBTC holders.
2 Likes

Just a quick background. I’m the founder of bitcashBank, a DeFi startup project on EOS. We were planning to use pBTC and pETH to allow crypto users to buy and trade BTC/ETH. The value of having good wrapped coins such as pBTC/pETH is immense. pNetwork has the potential to be the vital bridge between BTC/ETH chains and other L1 chains. Our startup wanted to sell the public the idea that pBTC was just as good as BTC, but the hack has made clear the vulnerabilities of wrapped BTC. The compensation plan is of vital importance to restore the reputation of the pNetwork as a custodial service that upholds the integrity of pBTC. How can we make people be confident that pBTC will be just as good as holding BTC in the future?

The core value proposition of the pNetwork network is to properly account for cross-chain transfers and to be an escrow/custodian. The network’s biggest responsibility is as an escrow/custodian.

I’ve read the proposal and the overall plan is very good because the team has identified where the bulk of the value can come from, but it can be improved by more aggressively paying back pBTC creditors as quickly as possible. The goals should not include anything other than to recoup BTC for pBTC creditors. The last goal ‘set the basis for pNetwork’s organic growth in terms of TVL and volumes to continue’ is directly dependent on the first.

Here are some suggestions. You can use the proceeds from the 1) upcoming rewards in the Sept Epoch 2) NFT sales for light nodes 3) and 4 million PNT rewards that are planned for the next ten months and convert them into BTC for the pBTC creditors. There should be a vote to get 4 million PNT up front and convert it into BTC perhaps with the help of Binance or a group of investors. The proceeds of the NFT sales should all be used to convert into BTC for pBTC creditors. If between the three steps there is not enough BTC raised, there should be extra PNT created until pBTC creditors are made whole. There should not be any hesitation in issuing additional PNT tokens if it’s necessary to make pBTC creditors whole.

I hope that the team and DAO members can restore confidence in pBTC so we can be comfortable using it on our platform in the future. Thank you.

3 Likes

Fully agree with this! We should bring back the trust in pNetwork as a reliable source of pegged tokens.

1 Like

This is what I was expecting from the CEO saying “we will make creditors’ whole”.

I don’t understand how his commitment got watered down so much so as to not inflate PNT to repay the debt, not take on any BTC risk, not reach out to strategic investors … really disappointing, though I’m happy that we will get something back.

Strange that they don’t mind diluting PNT for Binance reward program and everyday LP incentives and 10.5% APY to PNT DAO … but they are ok to leave pBTC on BSC creditors injured because they don’t want to market sell PNT (and can’t be bothered to find a strategic investor that would buy the PNT constrained for 2-3 years) in order to fix their reputation and actually increase it to the next level. With TVL $200ml and $33ml market cap I would have expected a stronger solution.

It seems this desire to pass everything by a DAO vote is what is causing the great fear in causing a bit of short term pain to PNT holders.

Bitfinex didn’t make a vote before it socialized the BTC 72’000 it lost in a hack and then compensated fully to the last dollar (and much more because the debt-token was convertible to equity in Bitfinex).

Still, I am happy that there is some compensation plan and hope for the best.

2 Likes

Thank you all for your comments and suggestions. Below a few additional points to reiterate your feedback and answer open questions.

In the opinion of the team, a main driver for defining any actions forward should keep into consideration the interests of all parties involved. The rationale being that a successful pNetwork project positively impacts the ability to recoup value for whoever was affected by the attack. PNT is one key asset for the project along with pNetwork’s open-source codebase and team member’s knowledge and skills in the specific field of operations of the project. Therefore, any compensation plan would (either directly, should the compensation be in PNT, or indirectly, should the compensation be in other assets) benefit from a strong and successful project.
The original proposal (that is not set in stone, but can be reiterated based on community feedback) is aimed at maintaining value within the project for DAO members and node operators while recouping value for pBTC-on-BSC holders.
Specifically: since its inception, the project has been committed to progressive decentralization. Hence, expanding the network of node operators and expanding the number of DAO members have always been two core goals of the pNetwork. The aim to convert pBTC-on-BSC holders into DAO members and/or node operators goes in that direction and, if successful, would contribute to a positive progress for the pNetwork ecosystem both reinforcing security/reliability and decentralization as well as creating a flywheel effect for which the more entities are involved with the project the more additional target audiences the project can reach.

The above reasoning is a preamble to further iterate the points raised by @gmork that any compensation plan should pay attention to not “widely damage” full (current) node operators as well as not require pBTC-on-BSC holders to be part of the DAO.
As for the former point (node operators), I agree that it is important to maintain value for full node operators for the project to continue growing. As per the initial plan, this was aimed to be achieved by leaving node operator rewards (from cross-chain fees) unaltered and with no direct intervention on them - the only modification being a potential increase in the number of pNetwork nodes via the new “NFT light node” feature. However, the introduction of “light nodes” (meaning the possibility to spin-up nodes with a lower entry barrier) had already been discussed and it goes in the direction of expanding the network of nodes that is an inherent goal of pNetwork. At the same time, the impact of this on current node profitability is balanced out by the fact that rewards would be distributed proportionally to the daoPNTs at stake. Even with the addition of new light nodes to the network, full node operators (with a number of 200,000 PNT to 400,000 PNT at stake) would benefit from the network proportionally more compared to light nodes (starting stake at 4,000 PNT). Should new NFT light nodes decide to expand their staking position, a tokenomics-based flywheel effect would enter into play therefore still creating a benefit for full node operators.
As for the suggestion to target the NFT sale to “anybody who might be really interested in the node” - I would be genuinely interested in understanding why you think the current proposed approach doesn’t do that? The current proposed approach is already meant to be open for anyone interested in running a pNetwork node, it is not just directed to pBTC-on-BSC holders who suffered the attack. Specifically, the means of payment for the 2 phases of the NFT sale would be defined in terms of pBTC-on-BSC and pBTC-on-ETH or ETH respectively. This would just be the means of payment and not the target audience of the NFT sale, that would (as @gmork suggests) be open to anyone who is interested to join. The rationale behind using pBTC-on-BSC as a means of payment for the NFT sale on BSC (phase 1) is directed to both rebalancing the pBTC/BTCB ratio and decreasing the amount of pBTC-on-BSC that need to be reimbursed. Similarly, the rationale behind using pBTC-on-ETH or ETH (to be then converted into BTC) as a means of payment for the NFT sale on Ethereum (phase 2) is directed to collect BTC that can be used to partially recoup value for pBTC-on-BSC.
That said, it seems like your (@gmork) perception on this is that currently the NFT sale would be targeted at a smaller/non-the-right-target audience - can you please expand on why you think this might be the case? What changes would you apply for the NFT sale to be accessible by “anybody who might be really interested in the node”?

Considering all of the above, I’d like to expand on some of the proposed alternative approaches the community has suggested (thank you all for positively contributing to the discussion!). The three main suggestions received here (plus, one from Telegram) are:
a) recoup value in BTC
b) recoup value in a USD stablecoin (considering the value of BTC at the time of the attack)
c) recoup value by getting an investment from VCs or Binance
d) recoup value by offering multiple NFTs, each one with a different configuration in terms of duration of the cashback
e) recoup value by diluting PNT

Going in order:

a) recouping value in BTC vs recouping value in non-BTC (suggested by various people, including @gmork @merivercap among others)

Recouping value in BTC is a possibility. The rationale behind the team not proposing this as the first option is that we could not find a straightforward path for doing so in a value-generating manner. Suggestions from the community on this subject, for now, have also shortcomings as for how this would work.
Specifically, as suggested by @gmork the BTC could come out of an additional 0.05% fee on cross-chain transactions. While this solution would not negatively impact the work of node operators, as he himself suggests, this would carry the problem of “uncertainty about the period required to fully cover the loss”. In its initial proposal, it was the intention of the team not to leave the compensation plan as open ended, but rather to give pBTC-on-BSC holders a predefined and achievable timeframe for the value to be recouped. The reason why this would be open-ended is that it would be dependent on the price of BTC (i.e. if the price of BTC continues to grow, the amount to be reimbursed would continue to grow).
Other community members have suggested similar approaches, where a large percentage of the rewards for the work of node operators is redirected to pBTC-on-BSC holders. This approach would have the same issues presented above, plus the additional downside of making it unattractive for additional entities to join as node operators, hence significantly slowing-down the growth and success of the project.
As a side note, since some discussions both on the forum and on Telegram suggest that recouping value in BTC would be a way for the compensation plan not to be dependant on the success of the project - I’d like to point out that, even in this case, recouping value in BTC as per the approaches suggested above would require for the project to be successful.

b) recouping value following the compensation plan proposed but in USD stablecoin, considering the USD countervalue of BTC at the time of the attack (proposal from Telegram)

This is a valuable suggestion and something we are evaluating internally in terms of feasibility. No additional questions on this suggestion on our side for now.

c) recoup value by getting an investment from VCs or Binance (suggested by various people, including @merivercap @avirap among others)

Recouping value via an external investment is a possibility. The rationale behind the team not proposing this as the first option is that fundraising tends to be a long process with no guarantees on it resulting in a positive outcome. Again, resulting in uncertainty about the timeframe required to recoup value.
Any kind of evaluation of a project in terms of investment from a VC requires production of a targeted business plan, team interviews, due diligence in terms of the project, the community and how the specific project aligns with the interest of the specific VC. Because of its nature, such an evaluation process is inherently long and therefore wouldn’t enable to get an immediate concrete answer in terms of recouping value for pBTC-on-BSC holders. Additionally, given the inherent nature of the VC business, the scope of the fundraising couldn’t exclusively be the compensation plan, but it would need to expand to the project as a whole.
I see some comments suggesting that the team “can’t be bothered to find a strategic investor that would buy the PNT constrained for 2-3 years”. To this, I would like to respond that the team is more inclined towards a solution that recoups value for pBTC-on-BSC holders via more precise steps rather than pressing the “hold on” button until potential investments are closed. That said, should the community prefer this option as opposed to alternative plans based on the initial proposal, work in this direction can be done.

d) recoup value by offering multiple NFTs, each one with a different configuration in terms of duration of the cashback (suggested by @aethen)

The tokenized access to a crypto card cashback is just one element of the bigger picture so I have some concerns as to make it even more complex. That said, this is an option that can be considered. Let’s see if someone else expresses interest for this point.

e) recoup value by diluting PNT (suggested by @avirap)

Recouping value by diluting PNT is a possibility. The rationale behind the team not proposing this as the first option is that we would prefer to maintain value in the project, since this is an important element that benefits all parties involved (as explained in the initial section of this reply).
As for the specific reference to incentives currently running “Strange that they don’t mind diluting PNT for Binance reward program and everyday LP incentives and 10.5% APY to PNT DAO”. Since you don’t seem familiar with the topic, I’d like to clarify that the external incentives mechanism for DAO members falls within the initial plan presented at the time of PNT inception as a way to boost the pNetwork ecosystem during its initial stages. Therefore, it is not strictly a dilution since it was already planned and presented when PNT was launched. Additionally, the percentage for the current period (second year of the DAO) was initially planned as a 21% APY - the proposal for reducing it to 10.5% was not initially planned, but an element that would be introduced by the compensation plan should it be approved. Hence, part of the inflation initially planned for DAO members would already be directed and create a benefit for pBTC-on-BSC holders. As per LP incentives, this is again not additional dilution but the same inflation presented at PNT launch. Similarly to other DAO members, daoPNT tokens at stake in the DAO coming from the team generate an incentive - such an incentive generated on daoPNT tokens of the team is used to expand the pNetwork ecosystem, for example in the form of LP incentives (this has helped in achieving organic growth of pNetwork’s TVL over the past months). Finally, marketing activities with Binance are covered by the team funds.

A final note on the decision to involve the pNetwork community in defining the compensation plan. Specifically addressing a comment from @avirap “It seems this desire to pass everything by a DAO vote is what is causing the great fear in causing a bit of short term pain to PNT holders. Bitfinex didn’t make a vote before it socialized the BTC 72’000 it lost in a hack and then compensated fully to the last dollar (and much more because the debt-token was convertible to equity in Bitfinex).”. Firstly, I would just like to point out that Bitfinex was in a very different situation compared to pNetwork’s as at the time of their hack the exchange was among the top 5 biggest cryptocurrencies platforms and generating Millions in fees. Potentially, pNetwork could follow a similar approach to recoup funds, however it would take a much longer timeframe compared to the timeframe proposed by the initial proposal.
Being inclusive of the community for defining a compensation plan seemed like a good idea that goes in the direction of decentralization and is in line with the pillars of the DAO-ecosystem. In this ecosystem, we envision DAOs as an innovation towards how companies and communities are organized - achieving this resolution via a decentralized governance process would be a great step forward for pNetwork as well as one of the very first examples of serious controversies solved in a decentralized fashion. That said, if the community prefers not to be involved and to just have a decision imposed upon them, so be it - let us know.

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Hey Tom,

thanks for your detailed response and explanations. With this multiple NFTs thing I was just thinking on how to “produce” more long term PNT-holders … If you want to keep it simple than just one type NFT that includes one year “black” and if sb wants to have a longer timeframe he/she just needs to buy multiple NFTs (if you want to reduce the “blacks” year after year you can also rise the “price” in additional NFTs … 2nd year one additional NFT gives “VIP+”, two additional NFT give “black” // 3rd year one additional NFT gives “VIP”, two additional NFTs give “VIP+”, three additional NFTs give “black” // …).

Thanks again. How you and the team are handling this crisis is exceptional.

The mental gymnastics that some engage in to justify their untenable positions is quit impressive, but unfortunately does not change the reality of the situation. And that reality is quite simple.

Every pBTC that has been issued is a claim on the pNetwork for a debt that is payable in bitcoin. It is an obligation of the issuer to the holder, and as such represents a contract.

A cursory look on Wikipedia will show even the legal layman that the formation of a contract generally requires an offer, acceptance, consideration, and mutual intent to be bound.

All of these elements are present here, signed in a cryptographically secure manner, recorded on a permanent indelible ledger for the rest of eternity for all to see.

As such, pBTC is a legally binding contract between the issuer and the holder. In the event of a breach, the injured party may seek judicial remedies.

The notion that the issuer can retroactively and unilaterally change the meaning of the contract and redefine it as whatever suits their needs without the consent of the other party is absurd.

Now it is true the issuer has the option to repay the debt in the legal tender of the jurisdiction they operate in, but it has to be for the equivalent value at the moment of repayment, which makes that point immaterial and the discussion around it meaningless.

Certainly, the choice of USD “to recoup value” is interesting, and begs the question as to whether pNetwork is positioning itself to come under US jurisprudence. A simple Google search can find numerous examples of US courts asserting extraterritorial authority over cases just because the parties involved were using the dollar. If pNetwork decides to follow that route, then proceed at your own peril.

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