In the wake of a substantial cyber breach last November, where over $128 million in assets were compromised, Balancer, a leading decentralized finance (DeFi) protocol, is set to redistribute $8 million in recovered assets to those impacted by the attack. This move is part of their broader recovery strategy, which includes assets recovered through collaboration with white-hat hackers and internal measures.
How Were the Funds Recovered?
A proposal from Balancer, dated November 28, revealed that approximately $28 million of the stolen assets have been reclaimed. Of this, around $19.7 million continues to be managed by StakeWise, a liquidity protocol using osETH and osGNO tokens. Balancer has allocated $8 million specifically for affected liquidity providers (LPs), promising direct compensation for their losses.
What Compensation Model Is Being Used?
Balancer has chosen an “unsocialized reimbursement” policy, ensuring that only those LPs within the compromised pools receive payments. The allocation is linked to the former ownership of Balancer Pool Tokens (BPT) and will be disbursed in the original type of tokens that were lost during the breach.
The security incident was traced back to a flaw in Balancer V2’s composable stable pool structure, categorizing it as one of the most significant attacks in the DeFi sphere in recent times.
Recognizing the efforts of recovery allies, Balancer is proposing a 10% reward for six white-hat security researchers instrumental in the recovery effort. These rewards could be as much as $1 million, with the largest recovery effort by an anonymous entity retrieving $2.68 million on the Polygon network. “Our recovery would not have been possible without the community and white-hat partners,” a Balancer representative stated.
Balancer insists that all white-hat participants undergo identity verification and sanction checks. Anonymous rescuers on the Arbitrum network, however, decided against claiming rewards.
Users affected by the breach must claim their distribution within 180 days, failing which the funds will revert to a “dormant fund” and may be reallocated through a governance vote, highlighting Balancer’s commitment to transparency and collaborative governance.
Key Distribution Details
- •$8 million to be redistributed to affected LPs
- •A 10% reward is earmarked for white-hat researchers, up to $1 million each
- •Unclaimed funds after 180 days will enter a dormant fund, subject to reallocation
This strategic approach showcases Balancer’s dedication to safeguarding its community and strengthening the security measures within the DeFi landscape post-attack.