Ribbon & Divergence Ventures

Context

As you have probably seen already, there has been some drama around Ribbon and Divergence Ventures. Please read this tweet thread first for context:

Intro

This post will outline some historical context and steps forward.

Timeline:
April 24
— Started working on token
May 17 — Investor update email, which included that a token is launching and will be airdropped over next few weeks
May 22 — Snapshot for airdrop
May 24 — Token and airdrop announced

On May 18, under the instructions of the partners of Divergence, a Divergence team member deposited multiple times into Ribbon’s vaults in order to game the airdrop. With our minimum deposit requirement of $100 (this was not disclosed), this was not enough to prevent the 0.1 ETH deposit ($328 at that time) from being accepted as a legit deposit.

The airdrops collected from that was sold for ETH yesterday. The amounts earned from that airdrop (719 ETH) were returned back to the Ribbon DAO treasury.

Action 1

We are going to put up a proposal in a few days to decide on what we are going to do with the 719 ETH returned.

Action 2

We have seen a few tweets saying how Divergence’s public accounts have gamed the airdrop by depositing early into the vault. This is true, but due to the fact that they were not aware of an airdrop, we consider it fair play as early supporters of the protocol — they had over $2mm deposited before the team ever mentioned token airdrops to investors.

On top of that, significant portions of their RBN was earned in RGP-2: Liquidity Mining, which was a public program for people to earn RBN by depositing into Theta Vault, with governance processes and information on deadlines shared weeks in advance. We do not plan to pursue the additional ETH or RBN from them.

After speaking to Divergence, they have graciously agreed to donate their seed round allocation (~1.35M RBN) to organizations that can help make the industry better (diversity, regulation, etc), which will be decided over the upcoming days. In the meantime, this RBN allocation will be held in the DAO, then will be vested directly to the organizations. This allocation was on a 3 year vesting schedule, and the vesting schedule will remain as is.

Action 3

On top of that, to quell fears that our investors are depositing based on inside information, we have compiled a list of 137 addresses that have deposited after the investor email.

We will be sending an internal email to our investors to return all RBN airdrops received to the Ribbon DAO Treasury if they were depositors between between May 17 4pm UTC and May 22 12am UTC. Although it will be difficult/impossible to prove ownership, we believe that the chain analytics ninjas will figure out if there is more malicious airdrop farming.

Action 4

We will create a governance proposal to reward Gabagool with a 20,000 RBN bounty from the Ribbon DAO Treasury for identifying the airdrop farming transactions and bringing this to light.

Conclusion

This was an unfortunate situation overall for all parties involved — a learning lesson for other projects and investors regarding ethics and responsible disclosure.

Zooming out, this industry is still in its infancy and is learning how to navigate things such as this. We hope projects in the future benefit from what we have learned from this debacle. We will move past this soon and hopefully win back the community’s trust and confidence in the project.

building @ribbonfinance, previously @coinbase