Following a recent exploit in early November, the Balancer protocol attempted to recover some of the $128 million stolen. It is now time to redistribute the meager $8 million that was actually saved.
Balancer to return $8 million of the $128 million stolen
On November 2, the decentralized finance (DeFi) protocol Balancer suffered a dramatic exploit. A rounding error in its swap pooling function led to the loss of $128 million in cryptocurrencies.
Many players in the crypto ecosystem quickly attempted to organize themselves in order to recover as many funds as possible across several blockchains, both internally at Balancer and with the active support of white hat hackers determined to earn the famous bug bounties, paid in proportion to the amounts involved.
A few weeks after the incident, the time seems right to take stock, but above all to return the recovered funds to the users affected by this $128 million theft. In this context, the Balancer protocol has just proposed a recovery plan credited with… approximately $8 million.
Note: approximately $19.7 million in additional funds recovered, in osETH and osGNO tokens, remain under the separate management of the StakeWise liquid staking protocol.
More than 50% of funds recovered by white hat hackers
The amount may seem insignificant compared to the losses involved. However, as the Balancer protocol makes clear in its proposal, “users understand the risks inherent in DeFi and the community’s ongoing efforts to manage them.”
Of the total amount of funds recovered, $3.8 million — almost exactly half — required the intervention of a whitehat hacker, who was paid 10%, with a cap of $1 million per rescue and mandatory KYC identification.
In practice, this reimbursement procedure adopts a model presented as “non-socialized,” implying that “the funds saved from each affected pool will only be distributed to the liquidity providers (LPs) of the pool and blockchain concerned,” with a pro rata system based on actual holdings at the time of the attack.
It remains to be seen how the Balancer community will respond to this proposal. Meanwhile, the BAL price is struggling to keep pace with the current rebound in the cryptocurrency market, with an increase of less than 5% over the last 7 days.
