Crypto fundraising protocol, Gitcoin made a mistake that resulted in the loss of a Gitcoin token worth $500,000. The incident is currently under investigation, and the funds cannot be recovered.
Etherscan’s on-chain data reveals that on September 29, a transfer of 521,436 GTC tokens originating from Gitcoin’s treasury and directed toward the protocol’s contract address occurred. This transaction pertains to GTC, which serves as the native token for Gitcoin.
Following an on-chain governance vote conducted in early September, the fund transfer occurred. The purpose of this vote was to approve funding allocation towards Gitcoin’s merchandise, memes, and marketing, collectively referred to as the MMM work stream.
Despite the successful passage of the vote, an unfortunate human error occurred during the execution, resulting in the funds being directed to the contract address instead of MMM’s designated multi-signature wallet.
Jonathan Miller, a Gitcoin contributor, posted on the DAO governance forum, describing the error as an unfortunate incident. He also outlined the measures being taken to prevent such an occurrence from happening again.
“Large token holders and multisig signers have a responsibility to be extra diligent when it comes to handling funds that do not belong to them, myself included,” Miller said. “Unfortunate as this incident was, I hope it can serve as yet another lesson for many of us.”
One of the DAO’s researchers, Umar Khan, suggested treating the 521,436 lost tokens (worth $500k) as a reduction in the supply rather than a loss.
With a total supply of 100 million tokens, GTC holds a unique position, and Khan emphasized that Gitcoin’s treasury is the largest holder of GTC tokens.
The DAO analytics tracker DeepDAO reports that the Gitcoin treasury currently possesses approximately $55 million in cryptocurrency assets. The majority of these holdings, valued at $32 million, consist of GTC tokens. Additionally, the treasury holds $10.5 million in Ether and $8 million in USDC stablecoins.
Gitcoin’s co-founder, Kevin Owocki noted that the supply of GTC can be increased each year by 2%, but governance has never done it.
“Not that I’m advocating for that at this time, I’m only noting it is an option baked into the GTC smart contract,” Owocki said. “I’ll be curious if this narrative of ‘it’s GTC burned’ is seen as legitimate,” Owocki added, referring to Khan’s suggestion.
The incident drew some negative reactions from the community, with one member suggesting that the main DAO actors were being reckless with their funds.
The lost funds have had an impact on the budget for MMM’s activities. To address immediate obligations, they had to use the remaining funds, thus fulfilling some of their outstanding commitments.
Meanwhile, a new proposal has been created for funding the DAO sub-group, as stated by Miller, with a reduced amount requested compared to the previous proposal.