Thriving, not surviving: An assessment of the current status of Uno Re and a proposal for its future development

Scope: Protocol Improvement Proposal
Authors: Core Contributors Uno DAO

Summary:

The purpose of this proposal is to sound out the opinion of the members of the Uno Re DAO on a potential entrance of a new DAO member with resources, capital and business strategy to move forward Uno Re’s mission and vision for Web3. This proposal is organized in three parts:

a) Overview of the current status of Uno Re and its future prospects;

b) A possible new DAO Member committed to develop Uno Re;

c) Voting proposal.

a) The current status of Uno Re

After the security incident of 14th November, the Core Contributors of the Uno Re DAO responded vigorously to keep the Uno Re project afloat and to protect its investors, community, and DAO members.

As the DAO members are aware, a recompensation plan was proposed and approved by the DAO, being currently active and fully in execution, including all its addendums and clauses, including the burning of roughly 16.8% of $UNO’s total supply). In the interest of transparency, a post-mortem analysis of the planned fixes, improvements to be applied for all current and future iterations of the protocol was also shared. Since then, core contributors have also put out a fiscal transparency report, to share with the DAO the current financial standing of the company.

Having arrived here, and with a new year starting, the Core Contributors Team believes it is the perfect time to look further ahead – not just in a short time span of months, but also in a longer time span of years – and assess the chances of Uno Re’s mission to succeed to its fullest, considering the impact of the security incident.

Uno Re provides a unique and successful product in the Web3 market. We have grown steadily and surely – the protocol has underwritten over 100 products, covered over $15M, processed and paid claims of ~$500K with no net loss to its LPs. For a relatively young business in a relatively nascent industry, these are noteworthy achievements.

However, to be able to continue on this mission towards securing and covering Web3 whilst still achieving the standards of a successful business, it is necessary to consider whether resources and structures of the protocol as they stand today are sufficient for achieving Uno Re’s goals or if, on the contrary, they fall short of allowing Uno Re to continue with its mission.

To this day, the protocol is still active and Uno Re has a stronger and more resilient structure. The amazing support to the Core Contributors Team in the aftermath of the security breach is testament to the dedication that Uno Re’s community devotes to the protocol. This community continues with the same energy as in day one, which shows how much the project can develop.

However, because of the compensation due to everyone affected by the security breach, and the effort made in protecting Uno Re’s token holders, the protocol’s resource vaults have become depleted, which significantly affects Uno Re’s capacity for expanding into other markets and developing new products. Therefore, despite their best efforts, the Core Contributors have found themselves limited in their capacity to overcome the effects of the security breach and develop Uno Re to its full potential.

The business model remains successful, the product is still very much sought after since it is acknowledged by the market as one of the best there is in the decentralised insurance and reinsurance sectors. Despite the security breach, the future of Uno Re continues to be promising. The problem is simply that, with today’s situation of recovery, growth capacity is significantly curtailed. Putting it simply, Uno Re can survive, but not thrive.

What does this mean? It means that Uno Re will continue to forge its path forward within DeFi; but with a much more restrained roadmap and near-zero new lines of business and product. This will, obviously, be a result of a dearth of resources in terms of man-power, capital, etc. that have been eroded due to the events of the past few weeks.

All remaining horsepower available will be redirected towards V3 – an upgraded, more secure, and more decentralised version of the protocol as it stands today – but essentially, with no new changes to the architecture of the business, no new products, nor any additional development and marketing-heavy endeavours.

Although this option may be an acceptable choice for some, it is the collective responsibility of the DAO of Uno Re to think forward and strategize to continue the successful running of Uno Re protocol and to make it triumph among other Web3 projects.

b) New resources and new members:

For the protocol to continue to remain at the top of its game, several substantial steps must be taken, such as: the introduction of new product lines (in terms of both coverage offerings and capacity provision products), upgraded tech, and perhaps equally important - reinvigorated marketing.

Significant investment must come into the DAO to help the project expand and fulfil its business roadmap, given the depletion of the resources. One possible path would be to tap into entities that have enough expertise, manpower, and capital to join the DAO and bring their resources to Uno Re, helping the project absorb the shocks and reverberations of the last few weeks.

The Core Contributors team has dedicated itself fully to the success of the project, proposing its ideas and acknowledging its mistakes always with full transparency, making all its decisions with the sole view of protecting the protocol’s greatest asset: its community and token holders. However, it is also felt that the entry of new investment in the DAO would have also to imply a change to the current leadership, without, however, affecting the values, goals and mission of Uno Re and of its members.

Recently, a L1 protocol with 10 years of experience and expertise in running successful Web3 protocols has engaged with the management team to sound out the possibility of joining the DAO, contributing with its resources to help Uno Re make DeFi secure and accessible for all, not just for the next few months, but for years to come, and cement itself as a legacy protocol within Web3.

The Core Contributors team has held preliminary talks with the L1 on its entry into the project and the ideas for Uno RE. Due to legal restraints on both sides, and to avoid any liabilities arising from the same, the name of the L1 being considered and discussed herein cannot be revealed at this time; however, below are pertinent details about it, to provide more information to members of the DAO:

  • The L1 describes its mission and vision to be to build cutting-edge technology that extends the foundational principles of blockchain to address the needs of a worldwide population, and a world where every individual and enterprise enjoys unparalleled freedom to leverage the opportunities presented by Web3 and beyond;

  • It is an open-source, public protocol, “dual-chain layer-1”;

  • Its network is merge-mined with Bitcoin, designed to give blockchain activity ultra-efficiency and minimal data footprint, and caters to both main blockchain paradigms (EVM-based assets and UTXO-based assets);

  • The L1 knows Uno Re’s business and products and has the vision and resources to take Uno Re to the next level.

The Core Contributors team has conducted thorough due diligence to the best of its abilities on the L1 before entering the negotiations.

c) Voting proposal

Considering the state of the project after the security breach and the depletion of resources, the Core Contributors team would like to understand what the opinion of the other members of the DAO is about negotiating with the above-mentioned L1 the conditions for it to become a new DAO member, providing the DAO with new resources in terms of expertise, contributors, and capital.

The negotiations with the L1 shall be conducted by the members of the Core Contributors team with the purpose of agreeing to the best extent certain commitments by the L1 regarding the business plan and road map, such as:

  • Uno Re shall re-evolve to become primarily a coverage provider - but one that operates via partnerships with 10+ leading Web3 Audit firms to exclusively sell UNO coverage as part-and-parcel of their security audits;

  • There will be a relaunching of UNO WatchDog as an independent business unit – with services such as Smart Contract Audits, 24*7 Onchain Threat Monitoring and Incident Response, Penetration Testing (Web, Mobile, API, Infrastructure / Network / Nodes), Cloud Security, Consulting on Security Risk and Compliance, and more - and its own team and operations, separate mandates, only a revenue-based relationship with the protocol, and not under the governance of UNO DAO, to avoid conflict of interest with Uno Re, the coverage provider;

  • RWA pools will also be launched as part of Uno Re’s coverage provision ecosystem - UST bills to begin with, with structured offering expansion over time. Financial injection, DeFi experience, financial and business strategy expertise, and bolstered marketing support from the L1 could prove invaluable in order to ship these profit-generating products directly to the Web3 masses;

  • Launching of Protocol V3, including all its pre-established features, as well as new updates in response to upcoming DeFi market trends;

  • Design and development of a new flagship L2 Product to service newer, up-and-coming L2s that follow a similar bridge-stake-compound strategy as Blast and consists of two components: an SCV Bridge cover (encompassing Trustless Bridge Coverage & Token Migration Assurance) and ETH Validator slashing coverage, as well as Downtime Compensation Coverage (Compensating for losses due to unforeseen downtimes or outages in L2 networks, ensuring minimal impact on users). By providing coverage to users of these up-and-coming L2s - retail and institutional, alike - in case of validator slashing, bridge failures, or SCV exploits, this product would support rising crypto TVL on these chains and further mass adoption.

  • Boosted marketing and brand reach supported by syndicated PR networks, the most current KOLs, event marketing campaigns, and more;

  • Listing of $UNO on the flagship DEX on the L1 network, as well as deployment of all existing UNO v2 contracts on it;

  • Development and deployment of Embedded Insurance Vault;

  • Continuation of Uno’s efforts to set up a Legal Insurance PCC (Protected Cell Company) in collaboration with our TradFi partner with renewed fervour and access to resources.

  • A new UNO v3 whitepaper elucidating all this and more.

It is also complicated to make such significant modifications without changing the management team. Therefore, the Core Contributors team shall also negotiate with the L1 regarding changes on the operation and management of the protocol and of the DAO, to guarantee to the best possible extent the acceptance by the L1 of, among others, the following conditions:

  • The L1 shall become the entity in charge of execution and management of the protocol and delivery of its promised roadmap, and therefore the management of the DAO, protocol wallets, private keys, and all such logistical assets will be transitioned to the L1 team;

  • A new Core Contributors team will be built up by any additional members the L1 might see fit to bring in;

  • The current Core Contributors team will take on the role of advisors to the new team for a transitional period of (at least) 3 months, with the possibility of extension to assist wherever possible in pursuing Uno Re’s mission. Although they will help the new DAO member participate in the DAO and move Uno Re forward, the current Core Contributors team will not be responsible for the management decisions or operational strategies employed by the new DAO member;

  • The Core Contributors team and the DAO shall assume no liability for any actions or inactions taken by the new DAO member post-acquisition. All decisions made by the new DAO member are independent of the current Core Contributors team and the Uno Re DAO. The current Core Contributors team cannot also guarantee specific outcomes or results from this partnership. All DAO members and token holders, by agreeing to this proposal, shall acknowledge that participation in the DAO carries business risks, including the risk of non-performance by the new DAO member.

  • The current entrant Core Contributors team shall report every month on its progress and activities to the new rest of the DAO, ensuring transparency and accountability within the bounds of legal and contractual agreements.

  • For the initial 3-6 months, the L1 team will resort to only pushing critical proposals for vote and discussion on the DAO forum; their primary focus will be on executing Uno Re’s roadmap, continuing the protocol’s track-record of being a profit-generating business, and running and growing this business and its lines of revenue.

  • Once an acceptable level of success within these set standards has been met, the team shall then re-focus efforts on achieving complete protocol decentralisation – by routing all operations and protocol-relevant decision-making through the DAO.

As the Core Contributors team, we are proud to be members of a team and a DAO that runs a revenue-generating business within DeFi (a rare phenomenon in itself), and we sincerely believe that the injection of fresh resources into it will reinvigorate this business in a manner that ensures the continuation of its legacy to make DeFi safer for all, and profitable to its investors. The entry of the L1 can be the necessary catalyst for new things to come.

The DAO members must now vote to determine whether they agree with the Core Contributors Team proposal to negotiate with the L1 and to conclude an agreement implementing to the best possible extent the conditions and principles discussed above, with the view to bring the L1 in the DAO and commit it to further the mission and vision of Uno Re with renewed resources.

If the DAO members decide against entering the negotiations, then the protocol shall continue as it is and focus on developing v3, with the limitations already expressed before.

Whatever the choice, the Core Contributors team shall continue with its unwavering commitment to the community and the project, to make both succeed to the best of their efforts.

Update:

Based on community deliberation, we confirm the following aspects per the negotiations with the L1 Partner.

•⁠ ⁠Premium earned from watchdog insurance sales will remain 100% routed to Insurance LPs/Buyback and Burn.

•⁠ ⁠The new Insured Audit entity is being set up to combat conflict of interest as UNO Insurance products will also be sold at the point of sale by other third-party auditors (A new risk analysis framework is being developed behind the scenes in conjunction with the L1 for this endeavor). However, it has been confirmed that a % of profits will be routed for LPs/Buyback burn/veUNO Holders.

•⁠ ⁠The UNO token will continue to remain central to the token economy of the protocol.

A detailed roadmap for 2024 will be released shortly if the DAO approves the entry of new contributors and resources.

Voting shall go live on 15/01/2024, for a period of 3 days.

8 Likes

There is certainly a lot to unpack here and I mean that in a positive way.
There was a lot of things to consider and I appreciate the transparency. I would love to know who the partner is and a few more details; however I do like the big picture and the desire to make slight changes as new information pours in.

I personally would like to have a smaller piece of a larger pie than a big piece of a small one.
I’d love to see this partnership kick off and more resources be allocated to taking advantage of the huge pivot in Crypto as regulations etc stabilize.

2 Likes

Sounds great, continue negotiations and go for it!

2 Likes

wow it keeps getting better, this is a mindblowing vision, it makes all the sense in the world and i am happy to see some more confirmation regarding the central stage for Uno tokens.

Nice update. What time will voting start?

1 Like