Definition ∞ A reimbursement proposal is a formal plan outlining how to compensate individuals or entities for financial losses. In the digital asset context, these proposals frequently emerge after security breaches, smart contract exploits, or other incidents that result in the loss of user funds from a protocol or platform. They typically detail the source of funds for compensation, the method of distribution, and the criteria for eligible recipients. Such proposals are often subject to community governance votes in decentralized autonomous organizations (DAOs).
Context ∞ Reimbursement proposals are common in crypto news, particularly following significant hacks or operational failures within decentralized finance. These proposals highlight the challenges of recourse in a largely permissionless environment and the evolving mechanisms for collective decision-making in DAOs. The success and fairness of these plans are closely watched as they set precedents for future incident responses and user trust.
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