Lido DAO Governance Unlikely to Return 39 ETH in Sushi Recovery

Lido DAO governance is voting on whether to return funds that ended up in its execution layer rewards vault following a SushiSwap attack that resulted in a $3.3 million breach last month.

The majority of the lost funds were traced back to Michael Patryn (or Omar Dhanani), otherwise known by his pseudonym, Sifu, an alleged serial scammer who had co-founded QuadrigaCX — which is now bankrupt.

More than 885 ether has already been returned, but a portion (roughly 39.8 ETH) that was redirected to the Lido execution rewards vault had yet to be recovered as of publication.

A proposal to return these funds had been flagged with the Lido team, and a related snapshot vote was posted late last week.

So far, an overwhelming majority of Lido community members (99.92% as of publication) have voted to take “no action,” choosing not to return the 39.8 ETH back to Sifu.

Misha Putiatin, the CEO of Statemind, said on a discussion thread that despite the proposal making sense on a surface level, there could be severe ramifications to the protocol if it were to be approved.

“Without a clear framework, Lido DAO can be heavily throttled by [an] inflow of hack reimbursement proposals,” Putiatin wrote. “In case of reimbursement, DAO needs to be an arbitrary judge of what is legal/illegal activity for other protocols which is way beyond its usual capacity and might bring unpredictable legal risks.”

Pseudonymous user Hasu, a strategy adviser for Lido, added that the outcome will likely have significant consequences for Lido’s future decision-making.

“Whatever Lido DAO governors decide will not affect the case of Sushi primarily. Instead, it will create a precedent that will henceforth act as a policy, whether we want it or not,” Hasu wrote. “My concrete policy proposal is for Lido never to act as such an arbitrator between stakers and node operators and third parties.”

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