P2P.org - Chainflip Correction Proposal

John Murray -

TL;DR

  • We propose a one-time restorative action plan for an early investor whose tokens were uniquely locked at the State Chain FLIP Gateway level due to a mistake made during the staking process. 
  • This proposal is a refined and clearer version of the previously withdrawn proposal, incorporating community feedback and addressing past misunderstandings.

To address this, we recommend reassigning the existing locked tokens within the State Chain FLIP Gateway to the correct accounts, without minting or burning additional tokens. This reallocation will be managed in a way that maintains community trust and includes a reallocation fee to support both community and project development.

Background

During Chainflip’s bootstrapping phase following the FLIP token launch on November 23, 2023, errors in our staking process resulted in tokens being sent to non-existent validator addresses. The complexity of the process, combined with miscommunication and inadequate safeguards, led to this issue. Specifically, the following factors contributed:

  • We failed to ensure clear instructions, leading to confusion and mistakes.
  • We made assumptions without thoroughly verifying staked amounts after transactions were submitted.
  • We mixed up Ethereum key pairs and Chainflip-native key pairs as non-SS58 addresses in smart contract interaction were accepted.

A detailed chronological breakdown of this incident can be found in the Historical context section.

We take full responsibility for this mistake. The staking process has since matured significantly and now includes safeguards that make issues such as this highly unlikely to occur again. At the same point in time, we recognize that this specific case still requires resolution.

How and why did it occur?

After the FLIP token launch, the Chainflip team shared documentation outlining multiple staking options. One critical instruction advised users to call the fundStateChainAccount function with the following:

... Node ID as the SS58-decoded representation of the node, or in ‘HEX’ format, which can be retrieved from the node operator.

P2P.org provided both the Ethereum and Chainflip-native addresses to stake to its customer. While initial test transactions were conducted correctly, unclear communication from our side led to the wrong address being used.

As a result, the transaction was made to the correct Ethereum contract, but the payload contained an incorrect address. Consequently, the tokens were locked in non-existent validator addresses, rendering them inaccessible to anyone.

Proposal

We propose a one-time recovery option to restore the affected stake for the original token holders, Delphi Ventures and P2P.org Validator. This is our mistake, and we believe it is our responsibility to help resolve it. The recovery process will be implemented at State Chain FLIP Gateway level, ensuring no minting or change in the total supply.

Implementation steps & fee structure

To initiate the recovery process, we propose the following steps and fee structure, acknowledging that this service should not be without cost to the protocol or the community:

  1. Operational cost fee
    A non-refundable fee of $10,000 USD, payable by the applicant, to support the core team’s operational costs for managing the recovery process.
  2. Community contribution fee
    A 15% fee on the total FLIP tokens requested for recovery, allocated to the cross chain foundation to cover community governance council costs and to allocate to other development projects. The applicant will pay this amount in advance to the designated foundation address.
  3. Claiming process
    After both the operational and community contribution fees are paid, the locked tokens will be transferred from the non-existent wallet addresses to the designated account within the State Chain FLIP Gateway.

This fee structure ensures that the process remains sustainable, discouraging misuse and prioritizing genuine recovery cases, thus protecting the community’s resources and preventing delays due to opportunistic requests.

Implementation details

  • This recovery approach does not involve minting or burning any ERC-20 FLIP tokens, ensuring the total supply remains unchanged.
  • The process will be managed as an internal reallocation at the State Chain level, restoring access to the tokens without altering overall circulation.

Conclusion

We acknowledge that this mistake was ours, and we are taking action to correct it. This proposal offers a fair resolution for Delphi Ventures and P2P.org Validator, ensuring their rightful access to staked tokens without impacting the total supply.

This recovery will allow the affected parties to fully participate in the network while reinforcing our commitment to early contributors who supported Chainflip from the beginning. By taking this step, we aim to rebuild trust, strengthen community collaboration, and demonstrate the project’s dedication to fairness and resilience.

We encourage the community to support this proposal as a positive step forward for the Chainflip ecosystem.

Historical context & FAQ

Historical context

This historic context will help you to understand the underlying reason of why we are offering this proposal.

Historical reconstruction of transactions
Validator ShortCode ✅ Validator URL ✅ Ethereum Address ❌ SS58 Address Derived from Ethereum Address SS58 Address ShortCode
CF1 cFKnNkzE5RWjXnWb6M6E7mGMMWWJzU5WefFhgTFUMRjFiLgSd 0x6292Bb95D5Cc143A682A2Fe5cFadb18341108211 cFL6j7LeTxujarq6eNqbfokSdUbxQS621iWxfoQbqjfUe6XL2 U2
CF2 cFLUFB8mrkzotdY2YXymskZZdXjvKUEc7YwGNhRS1kwBZveSC 0xD158E92280fe577CD171C4f5a00858e040A99cf6 cFNbyFNRTUdKKmiLPmneuTc5jLN5StAwGS29TppNFgcKVD35E U1
CF3 cFK93R1TZuScu5m7YUwUpFCYdSWHS6hP8AxFTkr5ek6Xj5yum 0x6aAdE7Fed0B62fBE72e4fB464cd6c2dA87222450 cFLHMZkEJMxxzm5NX7k4ZURxPNfjKds6fSBrM5F3881ibhWfn U4
CF4 cFLdwAkiN1wHD6p9wGxkar6WsuyKZgQa7mgW4TXZcY6U4BZUN 0x38D1FAf61bd446F4e8227Ac61154A2a8d9690350 cFK9ytRTfWajasd6n6sXhdk8A7hvxEKSMFbnWzizZujMh7o3n U5
CF5 cFJvpH4ujyuv9HPR6iMx8BqN9K66eKxaWrwvcWHXjeZrKPBXD 0xe2c5d37B71522aeDD69f33e5b675112Ea8aCA030 cFNzpR9rWfsMVgC3izapBE1rY2BXfFMcqTF2SSeLwJhV1p5RF U3