Summary
The SEAL Whitehat Safe Harbor Agreement gives Aave DAOs a clear legal playbook for letting vetted whitehats rescue funds during an exploit while shielding both sides from most civil liability. It resolves bounty-payment disputes through escrow valuation and SIAC arbitration, obliges the DAO to pay a reward (at recommended rate of 10%) unless challenged within 15 days, and lets the DAO enforce identity-verification, diligence, and sanctions-screening requirements.
We recommend (i) implementing KYC/OFAC checks for whitehats, (ii) publishing the Exhibit D user-adoption steps and Exhibit E risk disclosures in the protocol docs, (iii) conditioning six-figure bounties on a post-mortem plus a short seven-day confidentiality window, and (iv) assessing whether differentiated caps per chain are warranted. After aligning these points with the SEAL team, it has been resolved that Aave may set its own identity and diligence parameters and will pin the full agreement to IPFS; formal amendments are disfavoured, but post-mortem and confidentiality practices can be requested informally, and a single bounty schedule will apply across all chains.
On that basis, we endorse full adoption of the SEAL framework.
The SEAL Whitehat Safe Harbor Agreement establishes a comprehensive architecture that enables decentralised autonomous organisations to invite ethical hackers to intervene during a live exploit and repatriate endangered assets. From the vantage point of a DAO contemplating adoption, the instrument offers clear strategic advantages while simultaneously presenting legal and operational exposures that warrant scrutiny.
Bounty Dispute Resolution
The Agreement prescribes an articulated procedure for resolving controversies concerning bounty payments. Points of contention may relate to the quantum of the Bounty, a whitehat’s entitlement to the Reward, or the extent to which any portion of the Bounty may be offset under the indemnification provisions. Where the sole issue is the valuation of the tokens forming the Bounty and eligibility is uncontested, the disputed sum must be placed in a dual-signatory escrow. Each side then appoints an independent valuation expert within thirty days. If the higher appraisal does not exceed 130 percent of the lower appraisal, the Bounty is fixed at the arithmetical mean of the two. Should the spread surpass that threshold, the parties designate a neutral appraiser whose determination is final and binding. Once the valuation is settled, the escrow agent releases the appropriate amount to the party legally entitled to receive it.
General Dispute Resolution Framework
Any dispute that remains unresolved after thirty days ripens into an “Arbitrable Dispute” and is submitted to binding arbitration administered by the Singapore International Arbitration Centre. Proceedings are conducted in English before a three-member tribunal whose constituents must have no prior or present connection with the parties unless expressly waived and must possess at least fifteen years of experience in sophisticated corporate transactions, or be a retired judge of the United States federal district courts with demonstrable arbitral expertise. Each party bears one-half of the initial arbitrator compensation and transcript fees; however, ultimate allocation of costs is governed by the tribunal’s award, which ordinarily shifts attorneys’ fees and the balance of arbitral expenses to the non-prevailing party. The resulting decision may be entered in any court of competent jurisdiction and enforced accordingly.
DAO Obligations Under the Agreement
By adopting the SEAL Safe Harbor framework, a DAO undertakes a constellation of substantive and procedural commitments. It must honour the agreed-upon Bounty—frequently articulated at ten per cent of recovered assets—and initiate any contest to a whitehat’s eligibility within fifteen days after funds reach the Asset Recovery Address, failing which acceptance of the reward is conclusively presumed. The DAO further covenants to release compliant whitehats from civil liability, waiving even unknown or later-discovered claims. Operationally, it must maintain a designated Asset Recovery Address, demarcate the smart-contract perimeter that falls within the programme’s scope, and publish clear channels for emergency communications. Governance formalities require that the Agreement be approved through the DAO’s ordinary decision-making apparatus, with any necessary smart-contract upgrades implemented in accordance with those procedures.
Sanctions compliance constitutes a critical dimension of the arrangement. Although whitehats represent that they are not subject to Office of Foreign Assets Control (OFAC) restrictions, the DAO retains discretion to calibrate the intensity of verification. Section 3.1 references the “identityRequirement struct,” empowering the DAO to accept fully anonymous or pseudonymous rescuers—albeit with heightened risk—or to mandate basic, intermediate, or full KYC verification. The same section allows the DAO to impose bespoke diligence requirements through the “diligenceRequirements string”; such conditions may encompass technical parameters for the rescue, documentation standards, time-sensitive reporting obligations, coordination protocols, or supplementary representations by the whitehat. The Agreement expressly cautions that jurisdictions may view anonymous rescues as elevating sanctions risk, and therefore recommends pre-payment screening and monitoring to avoid disbursing rewards to prohibited persons.
Termination of the Agreement
Termination mechanics are delineated in Section 8. The programme and the Agreement’s term commence upon ratification through the DAO’s governance process and conclude when the DAO passes a proposal that terminates participation. Termination, however, leaves intact any provisions that by their nature survive with respect to events predating the cessation. Amendment is addressed in Section 9.1: SEAL may alter the general form or non-community-specific clauses by giving forty-five days’ prior written notice on its website and principal social-media outlets, whereas alterations to community-specific terms must proceed through the DAO’s own adoption procedures and affect only that community.
Holding Whitehats Accountable
Accountability mechanisms are threaded throughout the Agreement. Section 3.1 makes satisfaction of every eligibility criterion—including identity and diligence requirements—a condition precedent to any reward, permitting the DAO to withhold payment if a whitehat falls short. Section 7.1(a) obliges whitehats to indemnify the protocol community and its affiliates for damages arising from misrepresentation or material breach, though liability is capped at the bounty amount actually received. The representations and warranties in Section 5, such as the prohibition on assigning rights or delegating obligations without written consent, furnish additional grounds for withholding rewards and seeking indemnification if breached. Section 9.9 further entitles the DAO to seek specific performance or injunctive relief, without the necessity of proving actual damages or posting security, should a whitehat threaten or commit a breach.
Legal Protections for Whitehats
Whitehats who comply with the Agreement obtain robust shields. Section 6.1 delivers an irrevocable release from the protocol community for all claims arising out of the rescue or the Agreement. Section 6.2 extends the release to unknown or unsuspected claims, while Section 6.3 includes an express covenant by the DAO not to sue. Although Section 7.1(a) preserves indemnification exposure, the clause caps financial liability at the bounty amount, thereby limiting downside risk for compliant whitehats.
Legal Protections for DAOs
The Agreement reciprocally protects DAOs. Under Section 6.4, whitehats release the protocol community from all claims that might otherwise arise in connection with the rescue. The indemnification promise in Section 7.1(a) reinforces that protection by shifting damages stemming from a whitehat’s misrepresentations or breaches back to the whitehat. Representations in Section 5.2—that the whitehat possesses requisite expertise, is not subject to sanctions, will comply with law, and will not infringe third-party intellectual property—further insulate the DAO.
Important Limitations
The Safe Harbor Agreement does not—and cannot—shield either party from every contingency. Whitehats remain exposed to criminal prosecution, sanctions enforcement, and liability for actions that exceed the Agreement’s scope. DAOs remain vulnerable to regulatory oversight, third-party litigation related to the exploit, and the non-delegable obligation to pay any bounty that becomes due. Section 9.2 emphasises that nothing in the Agreement constitutes legal advice on compliance, underscoring the need for each party to perform its own independent analysis of applicable law.
Implementation Recommendations
In light of the foregoing analysis, we regard the following measures as essential to a risk-adjusted adoption of the SEAL conditions by the DAO.
First, the DAO should stipulate that the identityRequirement field be set to “Named” making completion of a full know-your-customer review and screening against all OFAC sanctions lists a non-waivable prerequisite to bounty eligibility. By conditioning payment on successful KYC clearance and sanctions vetting, the DAO mitigates the risk of inadvertently rewarding a prohibited person and demonstrates affirmative compliance with prevailing AML/CTF rules.
Second, the User Adoption Procedures contained in Exhibit D—together with the risk disclosures set out in Exhibit E—ought to be woven verbatim into the publicly accessible protocol documentation, ensuring that community participants and prospective whitehats can review, in a single repository, the steps required for programme participation and the attendant legal and technical hazards.
Third, the Agreement should be augmented with a covenant obliging any whitehat who is to receive a bounty exceeding a designated monetary threshold—USD 500,000 provides a sensible marker—to furnish both a detailed post-mortem analysis and a publicly releasable incident report.
Fourth, the foregoing reporting requirement must be harmonised with a short-term confidentiality obligation under which whitehats refrain from publicising exploit particulars for a defined period—seven days is customary—or until the DAO releases its own root-cause summary, whichever occurs sooner.
Finally, the DAO should evaluate whether to impose differentiated bounty ceilings on a per-chain basis, calibrated to the economic value and technical intricacy of recoveries conducted on each network where the protocol is deployed.
Conclusion
After calibrating our recommendations with the SEAL team, the following practical conclusions have been reached:
- Aave shall retain unfettered discretion to define the identity-verification and diligence thresholds within the identityRequirement and related fields, and an immutable copy of the complete Agreement will be pinned to IPFS to safeguard its provenance.
- While the SEAL team discourages formal amendments in order to preserve a single, uniform framework across all participating protocols, they have acknowledged our proposals concerning post-mortem disclosure and a short confidentiality window and recommends that the DAO pursue these practices through direct, informal requests to whitehats rather than by textual modification.
- The framework does not presently accommodate chain-specific bounty segmentation; a single bounty methodology will therefore apply across every network on which the protocol operates.
In light of these understandings and our overall analysis, we support continued progress toward full adoption of the SEAL Whitehat Safe Harbor Agreement.
Disclaimer
This review was independently prepared by LlamaRisk, a community-led decentralized organization funded in part by the Aave DAO. LlamaRisk is not directly affiliated with the protocol(s) reviewed in this assessment and did not receive any compensation from the protocol(s) or their affiliated entities for this work.
The information provided should not be construed as legal, financial, tax, or professional advice.