K9 DAO Governance Paper: Post-Exploit Strategic Pathways

General
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Couple points. Brevity since it’s repetitive based on my last post.

  1. K9 was built to be liquid staking for Shibarium. It is not just “plug and play” on any chain
  2. If #1 and #3 need to be modified, how do you suggest the modifications?
  3. The options specifically state that this proposal is “what to do to recover from the hack” and not “what does K9 do next”. The Shibarium bridge was hacked. The tokens there have no way out. These are the solutions to that problem, since it is not currently being solved by shib.io
  4. The options that include shutting down Shibarium operations purposefully do not include starting a new liquid staking solution on another chain, because K9 operates liquid staking on Shibarium

I do not know how to make this any clearer but the Shibarium Bridge was hacked. K9 is a liquid staking on Shibarium. That is what it was purpose-built for. It is not a liquid staking anywhere else. The project operates on Shibarium only. So if you vote to shut down the Shibarium operations, then there is no liquid staking. There is no Bone Crusher. There is no staking, locking, farming, or anything.

Despite what others may say… this hack was bad. These are the options to help the impacted 23% of tokens

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That is the only purpose of this vote. There are options in this vote to not address it and to continue being a liquid staking operator for Shibarium and continue as normal.

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43

Smart take. Thank you for taking time to explain.

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44

Taking into account that K9 is a liquid staking operator on shibarium and staying in alignment with that I want to ask instead of minting 23% on a new chain as stated in option 5 maybe the DAO can stake and wrap $sKNINE tokens. Is that possible? Would the theoretical “$wsKNINE” come with a large implementation cost? The community also wrapping their staked KNINE tokens could introduce an alternative bridging solution that users from the Shib & KNINE communities could utilize to securely transfer assets crosschain as well as generate revenue for the DAO through bridging fees and zapped stake+bridge function service fees if wrapped staked KNINE were to be implemented.

The KNINE tokens being staked rather than burned or locked in a bridge would be more financially beneficial for the DAO given that yield in $BONE would accumulate. To insure financial growth of the treasury, trading fees across all KNINE products and operational chains should be allocated to a “recovery fund”. The more K9 volume increases across all tradable products the sooner holders can be made whole post shibarium hack.

Shib.io should certainly be on board with supporting KNINE and allocating trading fees from both shibarium and ethereum. Despite the actions of particular personnel, or lack there of in regards to communication, I do see room for Shib.io to allocate KNINE-WETH / KNINE-WBONE trading fees to the recovery fund if this fund is established by the DAO.

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My opinion after reading all feedback.

Maybe we should remove opinion 5 & 6 from this vote and concentrate on the status of Bonecrusher.

Something to consider is if we completely get off Shibarium then they can easily not repay the stolen tokens (yes I know, no communication or time line to repay)

If opinion 4 wins, then we proceed with next vote for the future of K9 since Bonecrusher can not be moved to another chain.

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To be honest, in an ideal world there’s nothing “better” than simply staying on Shibarium , if Shibarium were functioning normally and if the ecosystem relationships were healthy. The problem is that I can’t see “stay on Shibarium” as a realistic option right now, and I struggle to understand how anyone can treat it as a credible path forward based on anything other than optimistic hopium.

Even if we temporarily set aside the exploit itself, how it happened, why it happened, and how it’s been handled afterward, I think there’s an equally important (and maybe even more important) issue that people aren’t weighing seriously enough: the governance and communication environment around Shibarium.

How do you build on a chain when core developers and builders can’t reliably communicate with the chain’s own dev leadership? And beyond that, how do you build when channels presented as “official” for Shib-io/Shibarium repeatedly amplify misinformation, accusations, and FUD aimed at projects and individuals who are trying to ship products on that chain?

For me, that’s not a small PR problem, it’s a structural risk. A chain’s long-term viability for third-party builders depends on predictable coordination, professional communication, and a baseline level of good-faith conduct. If those conditions don’t exist, then “staying” isn’t stability, it’s accepting an ongoing dependency on an environment that can arbitrarily damage builders, liquidity, and community trust.

I understand why this is hard. A lot of people have supported Shib for years, and many of us have real capital and time invested (myself included). But at some point we have to stop evaluating the situation based on what we wish was true and start evaluating it based on what is objectively happening. Reality has to be the foundation for any vote that claims to be responsible.

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47

After reading the most recent blog post by Kaal multiple times,

Option 5 remains my vote.

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48

After reading Kaal’s article a few times, I’m wondering if we should make a decision now about options regarding SOU.

Kaal’s article states that community compensation will be deducted from SOU’s claim. If we move to another chain for the 23%, does that mean SOU considers this compensation? Or does the DAO get the rights?

Or if the DAO uses the treasury to compensate? What does SOU do?

Honestly, I find it difficult. The article raises so many questions, including:

  • Where is Shy and how much influence, power, and keys does he have?
  • Who has left and why, and are they being replaced by capable successors?
  • Which project can generate profit between now and three months?
  • What if Kaal quits?
  • I only see empty slogans, but not a single business plan with clear, achievable goals, a timeline, etc.
    -When will the bridge be fully operational again? And how is this possible without ETH liquidity, with only Sou to match?
  • shib io will make an initial substantial contribution to provide liquidity?
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TrustMeBro
TrustMeBro1024×1024 130 KB

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50

Such a spot on description of the situation Seizan! Everyone would have loved to see Shibarium succeed but when staying realistic and making choices to protect value, it is just a endless fund drain at this moment without any decent prospect for future growth and returns whatsoever.

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So according to the latest blog post from Kaal:

  • Our hacked funds will become tradeable NFTs - because nothing bad ever happens from repackaging unsecured debt, right???

  • Restitution depends on donations and future revenue - which is objectively the worst kind of revenue.

  • The hack apparently had numerous audits and federal interrogations (not one, not two, but three!), but we’re not yet entitled to any proof.

That’s enough smoke and mirrors for me. Option 5, with haste.

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52

Many thanks everyone for the efforts so far! Option 5 seems best for conserving resources. Having all my K9 on Shibarium I see understandable price variation eg. On Chewyswap 100 Bone = 12.47M K9 compared to uniswap rate of 6.58M and going forward things might get worse before it gets better.

With $BAD’s cost reduction they have withdrawn from CEXs, any idea what the cost/benefit of K9 listings are on MEXC, Gate and Bitmart?

Looking at trying to preserve some Shibarium presence, lack of K9 and bridging makes continuing current rate of rewards untenable, validator operations even if all proceeds went to K9 probably wouldn’t pay for running cost? I guess cost/liquidity needed for even smaller bridge not worth it/CEXs still bridge bone to Shibarium but they’d need alot of $$/supply for anything else?

Devil’s advocate - unblacklist the hacker’s supply (best case - everything sold, supply recirculated, Eth side tanks temporarily but from Seizan’s wallet analysis they do tend to hodl, one of many reasons why nobody has brought this up lol)

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Just a heads-up: the displayed value looks pretty off for some tokens. It was accurate for a long time, but something seems to have changed recently. I haven’t had time to work on the page in a while, but I’ll get to it when I can. :slightly_smiling_face:

That said, the tracked amounts and transaction history should still be pretty accurate.

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54

Thinking again, Option #2 (retreating to Eth) might be the simpler step for just now. #5 throws up alot of further questions/research etc required to really do it any sort of justice.

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Option 2 is difficult to promote, as it leaves k9 shibarium holders iliquid And waiting for external help, that is, it forces us to accept Kaal’s deal, which I will never vote for.

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56

Option 2 is not a last step forward. It’s the simplest step forward. Instead of trying to eat the hole problem in one step. Let’s take one step forward and address what options we have for the next step. None of the options are final steps. Some take more action than others do. I see option 2 as one step to cut cost as we properly plan for the next step. Option 2 gives the longest budget runway to make choices but still need to make choices in a timely manner. As I said it’s not the end. We then make another proposal on a new chain or staying on Shibarium.
It also focuses the discussion to one current problem at a time.
I don’t think option 5 works because I believe we need to move all tokens to a new chain or none. It’s all in on a new chain or nothing for me. Unless bone crusher stays active and we are expanding to new opportunities.

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that is correct, it won’t cover cost.

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I understand the intent here - Option 2 is the simplest step forward and saves resources for potentially better outcomes in the future.

But if the plan is to wait for the DAO to propose better options later, it’s worth noting that the Roundtable has already presented options - and Option 5 checks the major boxes.

Option 5:

  • delivers a clear plan for hack recovery
  • preserves the treasury
  • still leaves room for new ideas and future growth

Considering everything K9 has been through so far, I don’t think minting tokens on another chain ranks high on the list of existential threats.

Also, it’s not lost on me that these options exist only because the DAO responded proactively and decisively during the hack. These are K9’s best qualities. Option 5 is the most proactive and decisive choice. I don’t see any reason to stop now :+1:

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59

This response goes out to the dev team, and apologies that this is a bit of a late response. Is there any possibility to inform us the estimated figures on how much each option would cost the treasury if it received a majority vote? Just think it would give a clearer illustration on the cost implications.

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Roundtable Summary & Clarifications on the Governance Vote

First off, thank you to the SubDAO and everyone who has spent time over the past 19 days digging into the options, answering questions, and helping educate the community. Throughout this process, the Roundtable has stayed neutral — our goal has simply been to collect feedback, understand concerns, and make sure accurate information is available to everyone.

At the same time, a lot of misinformation has popped up in Telegram chats, whale groups, and private conversations — in some cases clearly to influence the vote. So we want to be very clear:

:backhand_index_pointing_right: The only official information is what’s written in these forum posts and in K9 DAO’s verified channels.
Not Telegram. Not private chats. Not speculation.

We strongly recommend taking the ~1 hour it takes to read the full proposal and all six options yourself. It’s far less time than most of us spend in chat groups daily, and the outcome of this vote will determine the future of the DAO.

This post is meant to:

  • Clear up recurring misconceptions

  • Simplify what each option actually means

  • Help you form your own view based on facts

Please read everything carefully and make your decision based on the actual proposal — not the loudest voice in a group chat.

Frequently Asked Questions (Straight Answers)

• Does K9 DAO have a $1M treasury?

No. As of January 4th, 2026, the treasury holds around $420,000.
Anyone quoting “$1M” is including the DAO’s KNINE tokens, which isn’t how treasury accounting works.

• Can’t K9 DAO just buy back the missing 23% supply?

Technically yes — but it would cost the entire treasury, not “10%.”
That would leave no money to operate the DAO going forward.

• Why doesn’t K9 do buybacks?

It does — they’re simply not announced.
Over the past 18 months, more than $60,000 has gone toward buybacks and market-making operations, with a dedicated $3,000/month budget line that is mostly used to buy KNINE.

• Shib offered SOUs — isn’t that compensation?

No.
SOUs are on-chain debt acknowledgements that basically say “we may pay you later.” They are not the same as repayment.

• Why can’t the developers work for free?

Because they have families, bills, and viable opportunities elsewhere.
It’s not realistic to expect skilled professionals to work without compensation.

• Is K9 building a bridge for Shibarium?

No. There are no such plans, and none should be assumed.

• Do any of the options involve raising new funds?

No. None of the options include fundraising.

• Can the DAO skip legal fees?

No. The DAO must operate compliantly.

• Why didn’t K9 file a police report?

Because the DAO didn’t have property stolen — individual holders did.
The stolen KNINE belonged to users on Shibarium, not the DAO itself.
Shima’s sleuthing thread explains how individuals can file a report depending on their jurisdiction.

• What if I don’t like any of the options?

You can:

  • Propose a new option

  • Exit the DAO by relinquishing your KNINE tokens

  • Accept the governance outcome

• Can’t we just pause Bonecrusher but keep the validator online?

The validator currently loses money each month.
At ~8 cents per BONE, the rewards don’t even cover the 2TB storage costs.
The DAO could run it, but it would essentially be a charitable act that drains runway further.

• “K9 made a lot of money on Shibarium — it should support it indefinitely.”

This is false.
Shibarium has been K9’s least profitable initiative.

Key facts:

  • K9 purchased over $100,000 of BONE, mostly above $0.40, because liquidity was required

  • The DAO was close to breaking even operationally before the hack

  • It has never been profitable — only net negative

• If I vote for Option X, does that automatically mean Y happens?

No.
There are no implied follow-ups.
Each option means exactly what is written — nothing more.

• Can’t Shib contribute to the costs?

At this point, no.
Shib has not replied for over a month regarding any next steps relating to K9 — in either public channels or private chats. There has been no indication they plan to contribute financially.

Summary of the Six Options (Plain English)

Option 1 — Do Nothing (Stay on Shibarium)

Continue operating normally with a fractional bridge and current costs.
Runway: 6–8 months, then Bonecrusher sunsets unless Shibarium volume grows dramatically.

Choose this if:
You think Shib will repay users and Shibarium will flourish.

Option 2 — Pause Shibarium & Open Source Bonecrusher

Hand off Bonecrusher for someone else to operate.
Shutdown K9 DAO’s Shibarium operations to reduce burn and extend runway.
KNINE remains only on Ethereum.

Choose this if:
You think Shib might repay users eventually (or it is not K9’s responsibility to repay users) and K9 should conserve funds in the meantime to wait for another opportunity that is worthwhile exploring.

Option 3 — Refund Users & Continue Shibarium Short-Term

Use the treasury to reimburse users for Shib’s error.
Remain active on Shibarium for 1–3 months, then sunset Bonecrusher when funds run out.

Choose this if:
You don’t think Shib will repay users, but you believe Shibarium itself has long-term upside.

Option 4 — Refund Users & Leave Shibarium

Use the treasury to refund users and shut down all Shibarium operations.
The DAO will have only a short runway to determine next steps.

Choose this if:
You don’t think Shib will repay users and don’t believe Shibarium will succeed.

Option 5 — Mint KNINE on a New Chain

Mint a new supply on another chain so users can claim stolen tokens without draining the treasury.
Withdraw BONE liquidity from Shibarium and move it to the new chain.

Choose this if:
You don’t think Shib will repay users, you don’t believe in Shibarium’s future, you believe in the community’s ingenuity to carve a new path forward, and you want K9 DAO to maximize runway — even with additional complexity.

Option 6 — Use Treasury to Launch a New Token & New Project

Shut down KNINE entirely and start fresh with a new community-driven token.

Choose this if:
You believe Shib will not repay users, Shibarium has no future, and the DAO should rebuild from the ground up.

Three “Decision Buckets” to Help You Choose

Bucket 1 — “Shib will repay users” or “It’s not K9’s job to fix Shib’s error.”

→ Look at Option 1 or Option 2

Bucket 2 — “I want Bonecrusher to keep operating.”

→ Look at Option 1 or Option 3

Bucket 3 — “Staying on Shibarium isn’t financially viable.”

→ Look at Option 2, 4, 5, or 6

What These Options Do Not Guarantee

  • A new product on any other chain

  • Developer support if funds run out

  • Automatic success with any new idea

  • That the dev team will produce a roadmap for the DAO

  • A move to BNB (no option includes this)

  • A liquid staking product on Base (no option includes this)

This vote is only about how the DAO moves forward from the Shib bridge hack.

Final Voting Reminder

An option must receive more than 50% of the vote to pass.
If no single option reaches that threshold, the top two will go to a runoff vote.

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