Crypto fundraising protocol, Gitcoin, has suffered a significant loss of a Gitcoin token worth $500,000 due to a mistake made during a fund transfer. The incident is currently under investigation, but unfortunately, the funds cannot be recovered.
According to data from Etherscan, the transfer of 521,436 GTC tokens from Gitcoin’s treasury to the protocol’s contract address occurred on September 29. These tokens are the native currency of Gitcoin. The transfer took place following a successful on-chain governance vote conducted in early September, approving funding allocation towards Gitcoin’s merchandise, memes, and marketing, known as the MMM work stream.
However, a human error occurred during the execution of the transfer, resulting in the funds being directed to the contract address instead of MMM’s designated multi-signature wallet. Jonathan Miller, a Gitcoin contributor, acknowledged the mistake and outlined measures being taken to prevent such incidents in the future.
Reacting to the incident, Umar Khan, a researcher at Gitcoin’s DAO, suggested considering the lost tokens as a reduction in supply rather than a loss. With a total supply of 100 million tokens, GTC holds a unique position, and Gitcoin’s treasury is the largest holder of GTC tokens, as per DeepDAO analytics tracker.
Gitcoin’s treasury currently holds approximately $55 million in cryptocurrency assets, with $32 million worth of GTC tokens, $10.5 million in Ether, and $8 million in USDC stablecoins. It’s worth noting that the supply of GTC increases by 2% each year, according to Gitcoin’s co-founder, Kevin Owocki.
The incident has drawn negative reactions from the community, with some members criticizing the handling of funds by the main DAO actors. The loss of funds has also affected the budget for MMM’s activities, forcing them to use remaining funds to fulfill outstanding commitments.
In response, a new proposal has been created for funding the DAO sub-group, with a reduced amount requested compared to the previous proposal. The incident serves as a lesson for the community to exercise extra diligence when handling funds and highlights the need for robust governance protocols and measures to prevent such errors in the future.
While the loss of funds is unfortunate, it remains to be seen how the community will address the situation and whether Umar Khan’s suggestion of considering it a supply reduction rather than a loss will be accepted. Gitcoin will also need to consider measures to regain the lost funds’ value and ensure the continued success of its fundraising protocol.
