coinedition.com
Cross-chain asset management protocol Stargate Finance has proposed to reissue a new STG token to replace its existing native tokens. As per the proposal posted on the DeFi protocol’s governance forum, the lack of clarity surrounding the ownership of Alameda Research’s wallets and other security concerns prompted this move.
The issue dates back to March 2022 when Sam Bankman-Fried’s crypto hedge fund Alameda Research acquired 10% of the total STG supply during an auction. Alameda CEO Sam Trabucco claimed at the time that the tokens would remain locked for at least three years, that is till March 2025. The voting powers associated with the STG tokens were ceded to early-stage community members.
Blockchain intelligence firm Arkham Intelligence reported sudden activity in Alameda’s wallets in December last year. The suspicious transactions led to speculations about a possible bad actor behind the activity. StargateDAO now believes that its proof-of-liquidity (POL) and the security of token holders face a significant threat due to the security concerns with Alameda Research’s wallets.
According to the proposal, “By re-issuing STG, StargateDAO would eliminate the risk of illegitimate STG transfers from compromised Alamada wallets and would protect the interest of all token holders.” The new token would effectively negate the consequences of 100 million STG tokens flooding the market in case the bad actor attempts a fire sale.
The re-issuing of STG tokens has been slated for 15 March 2023, which will be followed by a 1:1 airdrop for all token holders. As for the tokens purchased by Alameda, the Stargate Foundation would set them aside in a separate wallet until the bankruptcy court orders otherwise.
The proposal had a very positive impact on the STG. The news led to a 21% increase in the token’s price. It is currently trading at $0.74.