Hey Degens,

After much careful consideration and soul-searching, we’ve decided to share with the community the difficulties we’ve been facing in migrating the DEGEN L3 blockchain to a new service provider, which has delayed some really exciting features we have in the works. We know this impacts all of our community members most of all, and so we believe it's important to be transparent.

We have been trying for 3 months, since the beginning of August, to reach a solution with Conduit to migrate DEGEN L3 hosting away from their services. To recap what happened to the chain: 

• DEGEN L3 was processing $200k+ in bridge volume per day

• Conduit pushed a bad upgrade to the chain without notifying us

• this caused 54 hours of downtime, corrupted the chain state and transaction ordering, and led to $160k in lost user funds

• as a result, bridge volume dropped by 75+% over the next month
  

In the aftermath, Conduit: 

• refused to take ownership for damages to our community

• refused our requests to upgrade the chain

• refused to hand over our rollup keys for three months

• withheld our sequencer fees

• demanded a new contract absolving them of responsibility 

• negotiated said contract in bad faith over 3 months

Ultimately, we have determined that they are likely to maliciously comply with the proposed contract to delay the migration even further.

We have been eagerly awaiting the launch of a new bridging ecosystem that will enable seamless transfers of DEGEN alongside several partner memecoins across multiple chains. We're ready and waiting to deploy several new services on DEGEN L3 that we think are critical to improving the developer experience and range of available applications. However, because Conduit holds our rollup keys and has refused to upgrade our chain, we have been unable to sign the necessary transactions to finalize the deployment of the smart contracts or activate the new infrastructure provider’s sequencer. As a result, we are reaching out to you, the DEGEN community, to pull back the curtain and shed light on the situation.

We think it is helpful to go into more detail on the reasons we wanted to migrate away and why we feel that Conduit is not the service provider that will best serve the DEGEN community:

Lack of operational maturity

• Conduit launched the DEGEN L3 in March with a multisignature address shared as a signer with the STACK L3, 

  • This makes it impossible for them to hand over the original DEGEN L3 signer without also compromising the STACK L3 signer

  • Under the terms of the standard Services Agreement, Rollup Keys should have been handed over to DEGEN’s managing contractor within 30 days of termination of their contract, and this never occurred

• Conduit did not maintain a dedicated testnet configured exactly like DEGEN mainnet

  • They shared test environments between both DEGEN and Proof of Play, and used non-representative call data

  • Consequently, they launched a batch poster update in May that was not adequately tested, and did not notify DEGEN of this update in advance. 

  • This resulted in a corrupted chain state, 54 hours of chain downtime, and a failure to meet their lowest uptime tier under their SLA guarantees

• After the 54 hours of chain downtime in May and the resulting block reorganization, Conduit did not offer to help make DEGEN L3 users whole for losses incurred due to their surprise update, nor did they offer to refund any service fees already paid by DEGEN. 

  • Instead, they offered 6 months of free service and 6 months of service at a cost twice as large as our original payment agreement, which DEGEN felt was not commensurate with the expenses incurred to restore community members’ lost funds from the outage, totaling over $160k USD worth of tokens at the time of loss, nor sufficient for the resulting loss of trust in DEGEN L3

  • Conduit instead claimed that their agreement was with DEGEN’s managing contractor rather than DEGEN directly, and therefore did not feel they owed DEGEN any amounts unless DEGEN renewed services under a separate custom agreement, even though they have a standard Services Agreement and SLA
    

Bad faith dealings

• After DEGEN notified Conduit that they did not intend to continue as a client, Conduit confiscated the sequencer fees that should have been routed to DEGEN. 

  • Conduit has refused to release these funds unless a contract is signed between both parties. According to Conduit, this decision was made because the sequencer wasn’t generating a profit, and they kept the fees that should have been remitted to DEGEN in order to cover the operational costs of running the sequencer, specifically the gas costs associated with posting to the parent chain

  • DEGEN shortly thereafter indicated willingness to pay $5k per month plus the Orbit fees for migration support to the new infrastructure provider, which was expected to include a snapshot of the chain state, the configuration files for the chain, and the upgrade keys, along with minimal phone and email support for a seamless handoff of the RPCs to the new infrastructure provider’s endpoint.

• When DEGEN sought to migrate block explorer data, Conduit indicated that they had deleted the data and retained no backups, even though DEGEN had requested twice to save the data. DEGEN had to reconstitute this data from scratch, resulting in a degraded experience for users of the block explorer.

• After nearly three months of negotiations over the details of the migration contract, Conduit indicated readiness to sign twice, rejected the finalized electronic agreement twice, delayed for an additional two weeks. 

  • We understand that there are personal circumstances that could explain short delays in this process; but taking 3+ months to sign a contract is not the level of professionalism we expect from a partner running a mission-critical piece of infrastructure on our behalf
    

We always want to do what's best for the community, and we had sincerely hoped to reach an amicable parting of ways, but the circumstances of our most recent attempt at reconciliation have left extreme doubts in our minds that our respect and goodwill will be reciprocated. Therefore, we feel we have no choice but to bring our grievances to the public. We hope that Conduit will do right by the community by promptly complying with the steps necessary to begin migration. Should they refuse, we hope this serves as a warning to other decentralized communities considering their needs for chain infrastructure.

In the event that Conduit decides not to do the right thing, DEGEN stands ready to create a new chain and remunerate all holders and developers on the original L3. While this is not an ideal path forward, we hope the community can forgive us for trusting too much and erring on the side of kindness. We will keep you updated on the response from the Conduit team and the pending status of the L3, and in the meantime we understand if you choose to bridge off the chain.

As ever, we can’t thank you enough for supporting DEGEN and for making this community as wonderful as we know it to be. This small speed bump will have no effect on tipping, the Base token, or any other aspect of the DEGEN ecosystem outside the L3, so please feel free to keep tipping and shipping. We’re hopeful that we’ll be able to restore trust in the DEGEN L3 before long. We love you all.

The stays on,
Jacek and Colton