This is DeFi, a place with high risks and high rewards. At any point in time a project can lose 100% of their TVL via a smart contract vulnerability. We are all aware of the risks in this space when we choose to interact with any DAPP. The Bancor risks were detailed as far back as version 2.1 in the economic paper:
everyone has to do their own DYOR as this is the how we all operate.
Regarding this proposal, I argue that the current LPs that have stayed behind are aware of the situation and have made a bet on the protocol recovering. Those that have left (or will leave in the future and potentially realize a loss) with a loss have unfortunately given up any rights to being made whole in the future (it’s the choice for leaving the protocol).
It should also be considered that having the protocol take on such debt by issuing these receipt tokens might be counter productive to any recovery efforts as they will exacerbate any efforts that require not only making LPs in the protocol whole but those that have left (they have zero risk at that point in time but also expect a payment if the protocol is successful in the future)
With that said, there is nothing that would prevent the Bancor DAO from making these LPs whole in the future if for example
- The protocol is successful
- We have a large treasury
- market cap is above 1B
- etc…
I would much rather wait for when the protocol is healthy to consider such actions. Having any devs divert efforts away from recovery solutions (discussed in Feedback Request: Potential Direction for Recovery) or yield generating features seems counter productive at the moment.