DEGEN L3 migration hindered by Conduit standoff and financial losses

Deteriorating relations with Conduit have forced DEGEN to weigh drastic measures for users' protection.

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In a post shared with its community, DEGEN revealed mounting challenges in its ongoing effort to migrate DEGEN L3 to a new service provider.

The prolonged standoff, which DEGEN claims has stalled critical upgrades and harmed users, has spotlighted unresolved tensions with its current provider, Conduit.

Service failures

Since August, DEGEN has reportedly sought to transition away from Conduit following a series of operational issues that have shaken user trust.

According to DEGEN, Conduit pushed an untested upgrade in May without prior notice, resulting in 54 hours of chain downtime. The disruption allegedly caused corruption in the chain state, leading to a total loss of $160,000 in user funds and a drastic 75% drop in daily bridge volume over the following month.

In the aftermath, DEGEN claims Conduit refused to take responsibility for the losses or assist with solutions, declining to restore the lost funds or offer substantial support.

Although Conduit initially offered six months of free service, it later demanded double the original renewal fees, an arrangement DEGEN felt was disproportionate to the community’s damages.

The DEGEN team said:

“We wanted a solution, not added costs.”

Contractual disputes

One of DEGEN’s most significant roadblocks in completing the migration has been Conduit’s refusal to release essential rollup keys, preventing the network from activating its new service provider.

DEGEN alleges that Conduit withheld these keys unless a new contract absolving them of responsibility was signed, negotiating over three months with delays and setbacks.

Despite DEGEN’s readiness to move to a new bridging ecosystem that could bolster its capabilities, Conduit’s control over these keys has left the platform unable to execute the necessary steps to finalize deployment.

Further compounding the issues, DEGEN claimed that Conduit confiscated sequencer fees, claiming the funds were necessary to cover gas costs on the parent chain despite an agreement to remit these funds to DEGEN.

Additionally, DEGEN said Conduit deleted block explorer data essential to the chain’s transparency, necessitating a costly reconstruction effort by DEGEN’s team.

The DEGEN community has largely rallied behind the team, with many users expressing frustration with Conduit’s stance. DEGEN leaders Jacek and Colton have indicated they are prepared to launch a new chain and compensate holders if Conduit continues to block the migration, though they hope to avoid such drastic measures.

While the team prefers to avoid legal action, the DEGEN team said it will “pursue every avenue” to protect its ecosystem if Conduit fails to comply.

They wrote:

“We believe transparency is crucial, especially when it impacts our community. We hope Conduit promptly complies with the steps necessary for migration. If they refuse, we hope this serves as a warning to other decentralized communities regarding their infrastructure needs.”

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