Simple Summary
This proposal seeks to terminate 1inch DAO’s contract with Mr. Alexey Devyatkin and Hardware Wallet Team, and receive the compensation of the 2 million USD funding (the “Funding”) provided to Mr. Devyatkin under the [1IP-30] 1inch Hardware Wallet production completion (the “Proposal”) in full. Mr. Devyatkin has repeatedly breached the commitments made in the Proposal and has failed to deliver any significant results.
In addition to recovering the Funding, this proposal demands the immediate transfer of all deliverables to the 1inch DAO’s repository and under its control, the cessation of all use of the 1inch brand by Mr. Devyatkin and the HW Team, and the publication of a comprehensive report detailing the current state of development. Such demands shall be enforced through engaging a Representative for further communication with Mr. Devyatkin.
We believe it is in the best interests of the 1inch DAO and Community to pursue these actions and continue the development of the 1inch Hardware Wallet independently, ensuring the integrity of the 1inch brand and the proper utilization of community resources.
Abstract
Under the Proposal, Mr. Devyatkin and the Hardware Wallet Team (“HW Team”) received the Funding “to complete the product trade version (PTV) of the 1inch Hardware Wallet”. The Proposal was voted “In favor” by the 1inch DAO as of June 12, 2023, when the Community had placed their trust in Mr. Devyatkin’s ability to deliver the Hardware Wallet.
In the Proposal, Mr. Devyatkin made multiple commitments, none of which have been completed. Among other, Mr. Devyatkin pledged to:
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complete the Hardware Wallet production by reaching 7 Milestones, and make the product available for sales to the public ‘by the fourth quarter of 2023’.
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‘… complete the 1inch Hardware Wallet project, promising to utilize the grant prudently to ensure the product reaches the highest level of quality. This commitment extends from the software and hardware development phases through to the setup of manufacturing processes and the essential technical and security audits’ and ‘…ensur[e] that every dollar is spent towards delivering a top-quality product for the benefit of 1inch DAO and 1inch ecosystem.’
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‘…update the 1inch DAO on [the] progress through forum posts, Github and […] Telegram channel.’
Mr. Devyatkin has failed to adhere to each of the above mentioned commitments, exploiting the trust of the 1inch Community and breaching the binding agreement between Mr. Devyatkin and 1inch DAO effectuated through the Proposal. The details of the repeated breaches are provided below.
We suggest that the 1inch DAO vote to direct Mr. Devyatkin to refund the 2 million USD received as Funding, and comply with other demands listed below.
Motivation
The motivation behind this proposal is to:
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recover the Funding and receive the Deliverables into DAO’s control, in order to be able to further utilize these resources for the development of the 1inch Hardware Wallet with a different team;
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protect the reputation and credibility of 1inch brand, as a brand standing behind high quality products, made by invested and diligent contributors, maximizing the benefits for the community.
While the Hardware Wallet is a community project, it is important to recognize that 1inch Labs, as the main technical contributor to the 1inch DAO, has produced multiple proprietary deliverables that have been utilized by Alexei Devyatkin and his team in the Hardware Wallet’s development. These deliverables include, but are not limited to:
• Logo Design;
• Font Design;
• User Interface (UI) and User Experience (UX) Design;
• Graphic design for icons, illustrations, and other visuals;
• Marketing materials;
• Product and version of packaging design, including instructions;
• Main landing page and website development;
• Full test application for the protocol on both IOS and Android operating systems, including the source code.
• Data transferring protocol.
Specification
- Failure to meet the Milestones
The Milestones declared in the proposal have not been achieved and the product was not made available for sales ‘by the fourth quarter of 2023’. In the last report published by Mr. Devyatkin, the completion of the project has been postponed to the “first quarter of 2025”.
The update report provided by Mr. Devyatkin to the DAO in March 2024 acknowledges that 5 out of 7 Milestones have been postponed to 2024, and the 2 remaining ones have only been partially completed.
According to the updated report provided by Mr. Devyatkin in July 2024, none of the Milestones have been fully completed. The Product Validation Testing necessary for completion of the Product Trade Version (as a final goal of the Funding) has not yet started and cannot be completed before Design Validation Testing, which, as of now, has not even started since DVT devices have not been produced. Despite these poor results, Mr. Devyatkin continues to claim that the device will be ready for sales by the “first quarter of 2025”. The latest report provided in August 2024 has informed the community of some updates in terms of hardware developments, however, it appears that still none of the milestones have been fully completed. Mr. Devyatkin states that Design Validation Test is planned for September, while this step is included in Milestone 2, followed up by 5 more to be completed before the product can be launched.
We would like to draw the Community’s attention that although they have had 15 months, Mr. Devyatkin and HW Team have not managed to complete a single Milestone. We would like to invite the Community to assess whether the completion of all 7 Milestones, including full Design Validation Testing and Product Validation stages and manufacturing of the actual first batch, can realistically be achieved within six months.
- Failure to report to the Community
Mr. Devyatkin and HW Team have failed to duly report to the Community the delays in the delivery of the Milestones. Mr. Devyatkin did not publish any reports on the progress of the project until March 2024, when the product was supposed to be fully completed by the end of 2023. Mr. Devyatkin reported the delays three months after the promised date of completion, without consulting with the Community along the way, or reporting during the promised timeline, at the point when the inability to deliver became obvious, or in any other acceptable way honoring the commitments made to 1inch DAO.
Further, the report published in July 2024 and August 2024 only states further delays and incompletion of Milestones as a matter of fact without offering the Community any explanations whatsoever as to what caused these constant delays and lack of progress.
This inadequate reporting demonstrates Mr. Devyatkin’s lack of commitment to 1inch Community’s values and pledged transparency, accountability and respect towards 1inch brand.
- Poor Project and Financial Management
There is growing concern over Mr. Devyatkin’s handling of project funds and his ability to deliver on promised milestones. Despite receiving substantial financial resources, Mr. Devyatkin has failed to provide transparent reports regarding how much of the funding remains or how it has been allocated. The lack of progress on any of the seven promised milestones, coupled with repeated delays, calls into question his strategic decision-making and prioritization. Without any clear communication or accountability for the project’s expenditures, the Community is left in the dark about the financial health and direction of the project. This ongoing mismanagement threatens the project’s overall success and raises doubts about Mr. Devyatkin’s capability to fulfill his obligations as a project manager.
Conclusion of Breaches
Mr. Devyatkin’s mismanagement of the project constitutes a material breach of the Proposal, particularly impacting the benefits that the DAO was entitled to receive. Mr. Devyatkin’s failures significantly affect the Proposal’s expected outcomes, justifying termination and compensation of the full Funding amount. The key breaches are evidenced above and can be summarized as follows:
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Failure to Meet Milestones: Not a single one of the seven promised milestones has been fully completed. Originally set for delivery by the fourth quarter of 2023, the project has been repeatedly delayed, with the current timeline pushed to the first quarter of 2025. This extensive delay fundamentally undermines the project’s goals and the DAO’s expectations.
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Lack of Transparency: Mr. Devyatkin failed to provide timely and adequate progress reports to the community. Reports were only issued months after the expected completion date, without proper consultation or explanation. This lack of transparency violates the commitments made in the Proposal and erodes trust.
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Mismanagement of Resources: Mr. Devyatkin has failed to provide transparency regarding the use of funds, leaving the Community in the dark about the budget and its allocation. Despite receiving significant resources, no milestones have been completed, and the project is severely delayed, raising concerns about his project management capabilities.
Given these significant breaches, the DAO is within its rights to terminate the Proposal and seek full compensation of the Funding for the damages incurred due to Mr. Devyatkin’s mismanagement and failure to deliver on his contractual obligations.
Suggested Course of Action
- Representation
Subject to the successful vote of this proposal, 1inch DAO should engage an external legal counsel or request 1inch Foundation or other contributors to represent 1inch DAO in any further communications with Mr. Devyatkin (“Representative”). The Representative shall present Mr. Devyatkin with the demands, voted for by 1inch DAO and further communicate with Mr. Devyatkin regarding the resolution of this issue. Should negotiations fail, the Representative shall take further legal action. The Representative shall regularly report to the 1inch DAO on the status of negotiations and the proposed resolution.
- Demands
To remedy the breach of the Agreement, Mr. Devyatkin and HW Team shall comply with the following demands.
(a). Compensation of the Funding. Mr. Devyatkin and HW Team shall return the full amount of the Funding constituting the equivalent of 2 million USD to 1inch DAO Treasury within 10 (ten) calendar days from the ending of the Snapshot vote for the proposal (if passed). In case Mr. Devyatkin and HW Team fail to return the full amount of the Funding as set forth herein, the Representative shall take necessary enforcement actions.
1inch DAO Treasury Wallet Address: 0x7951c7ef839e26F63DA87a42C9a87986507f1c07.
(b). Transfer of the deliverables. Within 15 (fifteen) calendar days from the ending of the Snapshot vote for the proposal (if passed), Mr. Devyatkin and HW Team shall transfer any and all deliverables produced by them under the Proposal and pertaining to 1inch Hardware Wallet to the 1inch Github Repository https://github.com/1inch/community, (“Repository”), including:
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All the software developed by Mr. Devyatkin and the HW Team under the Proposal, any source code and documentation related thereto;
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Test application for the protocol for IOS and Android operating systems, including the source code thereof, that Mr. Devyatkin and HW Team were provided access to;
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Any other software, that Mr. Devyatkin and HW Team were provided access to;
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All technical, assembling, engineering, certification, instructional and other similar documentation and materials related to the hardware of the Hardware Wallet, its production, manufacturing, product design, operation, etc;
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Any other available documentation or materials that directly or indirectly concern the operation and/or production of the Hardware Wallet, or that have been named by Mr. Devyatkin in the reports published in March 2024 and July 2024, that Mr. Devyatkin and HW Team have access to.
By transferring the deliverables, Mr. Devyatkin and HW Team transfer any right, title an interest in such deliverables, and shall only have the possibility to further use the deliverables if 1inch DAO provides them with the permission in line with the general procedure described below in Section (c).
(c). License as Source-Available Project. As per the Proposal, Mr. Devyatkin has committed to open-source the hardware wallet project ‘to the extent that it does not harm 1inch DAO, the 1inch product, or the security of the hardware or software components’. Considering the incompleteness of the project, we believe it is in the best interests of the DAO to demand the publishing of the deliverables under the BUSL-1.1 source-available license. The Change License shall be GPLv3. The Change Date shall be in 15 years. The license shall include a clause for exceptions to the BUSL License, subject to the vote of the 1inch DAO. Such choice of the license ensures best commercial interests of the 1inch DAO, while publishing the code for the Community, providing ample opportunities for contribution with 1inch DAO’s consent.
(d). Cease and Desist from using 1inch Brand. In the interests of integrity of the 1inch brand, Mr. Devyatkin and the HW Team shall immediately cease and desist from using 1inch brand, its elements and trademarks (“1inch Brand”), including:
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Do not use 1inch Brand in any form of public communication, including but not limited to marketing materials, advertisements, social media posts, and any other promotional content.
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Terminate any direct or indirect mentions of any cooperation, partnership or affiliation whatsoever with the 1inch Brand in any public communications.
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Terminate the use of the 1inch Brand in any social media handles, accounts, corporate or private email address and other equivalent mediums, including but not limited to changing the handles of the HW X account; HW LinkedIn account; HW Medium account; HW Github account; HW Discord account (“HW Socials”).
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Terminate the use of 1inch Brand in the production, design, and development of the Hardware Wallet or any other products.
(e). Report. Within 15 (fifteen) calendar days from the ending of the Snapshot vote for the proposal (if passed), Mr. Devyatkin and the HW Team shall prepare a technically precise and extensive report that would explicitly describe: the purpose of each source code file, documentation, material, instruction or other item uploaded to the Repository, with respective links to the materials in the Repository. The report should also include the current stage of development and testing of each item. The report shall be posted in the Repository and/or on the forum of the 1inch DAO. The Report shall be sufficient to enable any person with required skill and knowledge to understand how the Hardware Wallet and its components can be produced, assembled and integrated (as per the current stage of development).
Final Words
We believe that the facts presented above sufficiently demonstrate the urgency of the need for the 1inch DAO to take decisive action against Mr. Devyatkin. The consistent failure to meet milestones, the lack of transparency, and the mismanagement of both resources and responsibilities have severely compromised the project’s success and the 1inch DAO’s interests. Mr. Devyatkin’s breaches have not only delayed the project but have also squandered the community’s trust and resources. Therefore, it is imperative that the 1inch DAO pursue the recovery of the full Funding amount and take control of the deliverables to ensure the project’s continuation under more capable management. This course of action is essential to protect the reputation and integrity of the 1inch brand and to fulfill the 1inch DAO’s value of delivering high-quality products to the Web-3 community.
