Stargate Finance has presented a proposition to reissue its STG token to address issues regarding the ownership of Alameda Research’s wallets and other security concerns. According to their proposal posted on their DeFi protocol governance forum, replacing the existing native tokens with the new ones is expected to bring more clarity and assurance.
The problem began in March 2022 when Sam Bankman-Fried’s crypto hedge fund Alameda Research purchased 10% of the total STG supply from an auction. CEO of Alameda Research Sam Trabucco stated then that these tokens would stay locked for three years and thus remain so until March 2025. The voting powers connected with those STG tokens were assigned to early participants in the community.
In December last year, Arkham Intelligence, a blockchain intelligence firm, discovered suspicious activity within Alameda’s wallets. This sparked speculation that an individual might be behind the suspicious activity. Now StargateDAO realizes that their proof-of-liquidity (POL) and token holders are at serious risk due to security issues with Alameda Research’s accounts.
The proposed solution by StargateDAO would allow them to issue new STG tokens, thereby eradicating the risks associated with illegitimate transfers from the vulnerable Alamada wallets. Also, this step is necessary to defend token holders’ interests and effectively contain any fallout should a bad actor try to sell off 100 million STG in bulk.
On March 15, 2023, the Stargate Foundation will circulate STG tokens again, followed by an equal airdrop for all token holders. The Stargate Foundation will put Alameda’s purchased tokens in a different wallet until further notice from the bankruptcy court. The proposition has generated tremendous support surrounding STGs; its market value rose by 21% after the news and is currently trading at $0.74.