pBTC-on-BSC: Proposal for removing toxic debt from circulation

All pTokens that are currently in circulation are claims on the pNetwork for the underlying assets, and as such represent debt the pNetwork, in its capacity as the issuer, owes to the holders. Due to the recent hack, the pBTC token has now become impaired and is no longer redeemable at face value.

In order to reduce the legal risks associated with this abnormal situation that has caused financial injury to third party creditors, it is hereby proposed to the pNetwork DAO that it start purchasing pBTC via open market operations, and add the impaired asset to its own DAO treasury. In this way, instead of the bad debt being owned by third parties that may choose to redeem it via legal channels, the debt will be increasingly owned by the pNetwork. Because it will be a debt the DAO owes to itself, legal action will no longer be possible.

The legal risk is directly correlated with the quantity of the bad debt and the time duration of its existence at the hands of others. Legal action could be the black swan event that wipes out shareholder value. Its probability could be reduced if the DAO were to start actively adding the bad debt to its balance sheet. Such action would be especially effective now since the debt is trading at a significant discount (1 pBTC = 0.43 BTC on Oct 10th), and could probably be gradually purchased for far less than the 277 BTC that were originally backing it.

An added benefit of purchasing this debt by the DAO would be that it has the potential to appreciate abruptly and yield profit should the stolen collateral be recovered through actions by law enforcement. Given how traceable and transparent the bitcoin blockchain is, the probability that the funds will be recovered eventually is not negligible.

If the legal risks are not properly understood and simply dismissed as FUD, that could pose a significant threat to shareholder value. Even if none of the current creditors take the case to court, which is unlikely, the debt itself is freely traded, and there is nothing preventing a company with specialized domain knowledge in debt collection from purchasing it cheaply now, and making a profit by collecting at or close to face value. The likelihood of that increases the longer pBTC is available at the currently very low price levels.

While the price of PNT has hardly budged after the hack, the price of pBTC has been falling relentlessly despite so-called “compensation” measures, and creditors have faced massive losses - some choosing to exit their positions at a fraction of what they originally put in. Stakeholders need to be made aware of the risks they are exposing themselves to by allowing this toxic debt to circulate freely for an indefinite period of time without any attempts to support its price. Hopefully, if this proposal is followed, some of these risks can be alleviated. If not, then at least let this serve as fair warning so that nobody is surprised when the inevitable has come to pass.

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Though it doesn’t seem like a bad idea, it doesn’t feel as wholistic of a solution as the compensation plan which the team proposed. How much of the DAO funds should be spent, over what time, do current DAO holders get anything in return, what if lost BTC are never recovered, how much outstanding pBTC could the DAO buy, etc, etc.

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You had old EIDOO now is PNT . Why not erase all old pBTC on BSC and start a new one ? Burn all stollen pBTC and send new to the old owners exept the hacker .

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I support this proposal!

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Repeg or die tryin’!

It is the only way forward. Support!

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The plan proposed by the team would only feel holistic to somebody who is a stakeholder, interested in preserving the value of the PNT token, and not meeting the obligations towards the creditors. Effectively it is a plan that defaults on the pBTC peg so that PNT holders can continue to make profit, while creditors see their life savings evaporate. At this point, it is only possible to exit a pBTC position at a 60% loss. Anybody who does not see how unbalanced the situation currently is has to be blind.