Eleven.Finance Recovery Plan

1. The Exploit

Our platform currently hosts more than 200 vaults in two chains using different yield optimization strategies. A few days ago, a malicious exploiter found a way to abuse one small subset of vaults and successfully drained all their funds.

2. Partial Recovery of Funds

Two events happened which allowed us to have more funds for recovery:

2.1. Securing Leveraged Farming (BigFoot)

At the moment of exploit, 11% of all bfUSD funds were being borrowed for leveraged yield farming positions which were deposited in USDT-BUSD WLP vault so the exploiter couldn’t access them.

2.2. Exploiter sends back $252,000

Surprisingly, 48 hours after the exploit, 849.2 BNB was sent back to original Eleven deployer address by a self-proclaimed whitehat hacker. This deployer address was not the current one but we quickly moved the funds to the new one to secure the funds. Whoever was involved in this, we are thankful as for a project of our dimensions every little bit helps.

UPDATE (2th July): Ongoing legal prosecution

We have been collaborating and exchanging information with ImpossibleFin, Peckshield and others in the space. They have been doing an amazing job, we can’t comment too much on the specifics but can say their are potential suspects and ongoing local police reports and legal prosecution underway in order to recover as many funds as possible.

3. The Compensation Plan

As a small market cap project that has seen success and growth in being streamlined, low fee and not having a treasury we have nothing to draw on to make a bulk repayment to those affected and cover the costs of the exploit.

  • Exploited funds are 75% of current total ELE marketcap, so financing the exploit entirely from emissions would instantly kill the token. We are committed to a sustainable ecosystem with a deflationary token that rewards every ELE investor from platform success. Having constant growth and a strong token is actually the only way forward to guarantee biggest chances of everyone recovering their funds.
  • Initially, we wanted to refund in the original tokens (USD, BTC and ETH). Doing it this way, would require three different compensation tokens and different oracles and would over-complicate the smart contracts and make everything harder to track. The majority of exploited funds were in USD, so we will snapshot the value at the time of exploit and consider the exploited funds as USD for everyone.

3.1. Instant Recovery Fund

During our discussions to decide best way forward, common advice from our advisors was that utilizing team fees as recovery is not a sustainable solution. Understandably, they are worried the team might lose incentive to work if they don’t earn any money for a long period of time.

3.2. Long-Term Recovery Plan

Based on the fact that we can’t really create money out of thin air and that we are investing personally as much as we possibly can, for the rest of the funds, there is only one way forward.

  • 3.6M of “11RV” tokens will be minted. The quantity of tokens represent the value of the $3.6M funds to be recovered. 11RV is a fully compliant ERC-20 token (more on this below).
  • All 11RV tokens will be staked in the vault and then distributed to every affected user proportionally to how much they had at the exact moment of the exploit.
  • It will be easy on Recovery Vault UI to track the current value of your 11RV token. The final goal is that one 11RV = $1.
  • Everyone is free to withdraw their staked tokens whenever they want. User who exits will burn all his 11RV and receive his proportional share of the current total compensation funds.
  • Our upcoming Leveraged Yield Farming platform will generate a lot of new revenue for the protocol. Initially 2/3 of all its revenue will go to Recovery Vault.
  • From current Eleven.finance vaults, all fees and buybacks will stay the same percentage, but 1/3 of the ELE buyback will be sent to the Recovery Vault instead.
  • All future upcoming products will contribute to the Recovery Vault until compensation is fully paid. (details about future products in the next chapter!)
  • Since everyone is free to leave and cash in the compensation at any given point, any sudden sell pressure is minimized, while rewarding the long-term ELE supporters that make the growth possible.
  • For a regular vault user on Eleven.finance, their fees are exactly the same as always, causing zero impact on user adoption.
  • Lastly, since 11RV is a fully compliant ERC-20 token, it can be traded and exchanged. The supply is fixed, and the tokens won’t be burnt until someone unstakes it. This means unaffected long-term believers of the project could buy shares of affected people that want to exit early for a higher than current price they both agree with . This allows even more options for affected people for recovering funds faster, while speeding up the whole compensation as a whole. No one has to participate if they don't want to and this allows those who support the platform and our vision to get behind our future growth. We are researching how to make this market possible so everyone in the community can get involved.

4. Self-criticism: Less is sometimes More.

We have learnt a lot of valuable lessons from this event. As a young aspiring project, we have had explosive growth thanks to being aggressive adding fast vaults and being innovative with our platform.

4. The Future of Eleven!

Alright, but what about the platform future and roadmap?

4.1. The Thirding

In case you missed it, soon, The Thirding will happen, where BONUS_MULTIPLIER on Masterchef will change from 3 to 1 at block 8874000. This means ELE per block will be 1/3 of current emissions.

4.2. Cross-chain Leveraged Auto-compounding Yield Farming (LYF)

We had on goal on mind since day one. To be the best LYF platform with biggest offering in the planet. And we believe we are closer than ever.

  • Lending banks will be renamed. First banks will be: eleUSD, eleBTC, eleETH and eleMATIC.
  • Our goal is to have the most competitive APYs in BSC and Polygon for lending single-staking and that other protocols start using our banks to inject as much TVL as possible. This new branding will make them instantly recognizable.
  • UI has been completely reworked from the ground up to offer a new better user experience.
  • All Eleven.Finance vaults will be fully compatible for leveraged farming. We will slowly add the most requested ones, but the possibilities are endless.
  • Slippage optimization: we will use protocols like Curve to swap assets into the farming position with the least price impact possible for the users. This is really important when you are leveraging your positions.
  • Farmers will be able to select which bank to borrow from for any farm.
  • Farmers can increase or decrease (both ways!) leverage of any opened farming positions without closing their position or any extra costs. If you increase your leverage, the platform will automatically borrow funds using your collateral and accumulated profits. Yes! This means you can actually easily compound your already auto-compounding position!
  • This lending protocol will contribute immensely from both sides to ELE ecosystem. The Lending banks will buyback ELE from Lending APY fees, and the borrowed farming positions will inject money in real Eleven vaults that are constantly doing ELE buybacks.

4.3. Arbitrum

In case you were unaware, Eleven.finance has been accepted in Arbitrum devnet. Top DeFi projects like Uniswap and SushiSwap are already developing their platforms in devnet and we will finally enter ETH ecosystem. The fees will be much more affordable which will allow for interesting strategies. The potential is exciting!

4.4. More Chains

We are not married to any chain — we constantly analyze the more trending ones and prioritize development based on that, but we have no limit in our mind. Our platform is built with the intention of supporting any chain. Including Leveraged Farming.

4.5. Zap Feature

Our vision and final goal, is that in future, the user won’t find any reason to leave the website as he has everything he needs already in it. For this reason, we will implement Zap Feature where user can convert their funds to the LP or asset the vault is utilizing so he doesn't even need to interact with any other AMM/project to use our vaults!

4.6. Unnamed Swap Project

This is a secret we have kept for a while, but since updated roadmap has been highly requested here it is.

  • Our Swapping platform will be forked from Curve and will initially focus on StableSwaps but we are open to Cryptocurrencies that are involved in our own platform.
  • We will have lower fees than any existing protocol, to incentivize other projects like 1inch to integrate it and attract traders and volume. We don't need this, and that's great, because we can afford having almost no fees!
  • Having our own LPs, our own swapping protocol, our own source of trading fees, we will be able to make vaults for our own LPs which makes attracting liquidity easier and opens a lot of new possibilities.
  • Every product works to make ELE token better. This is no different, there won’t be any new token released and this new product will also buyback burn ELE and contribute to deflation.

5. Wrapping things up

Thanks for making it this far! This article has been complex and content rich, it’s taken lots of hard work from many people, including our great community. Thanks to everyone who has stepped up and stepped forward during this challenging time. We feel we’ve struck a balance with the plan of fairness while continuing to allow Eleven to grow and prosper. This way we can develop, innovate and build out our roadmap to fulfil our vision of the Eleven Finance ecosystem being a true leader in the defi space.

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