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xToken Proposes Compensation After $25M DeFi Hack

xToken Proposes Compensation After $25M DeFi Hack
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The latest decentralized finance platform to suffer at the hands of hackers has proposed a compensation plan for the victims.

On April 12, staking and passive investing platform xToken was exploited with the use of flash loans. Over $24 million was taken from the yield-bearing liquidity pools for Synthetix (SNX) and Bancor (BNT).

The team had proposed 1% of the XTK token supply to be vested over a year to compensate the victims of the hack. However, the latest proposal seeks fairer restitution for those that lost funds.

20 million token recompense

The proposal reflects a consensus view from victims in that fair restitution would be 2% of the XTK supply, vested over one year. It continued to state that the pre-hack market valuation for XTK was around $500 million in fully diluted value (FDV).

“This valuation could be restored if trust, capital, and community were bolstered and interests aligned around ensuring a successful future for the xToken project.”

It added that the $25 million lost is around 5% of this prior FDV and 2% is a fair compromise between the fault of the project resulting in the loss of funds, and the inherent risk participants should have expected.

There is a total supply of one billion XTK tokens therefore 20 million will be allocated for compensation. At the time of writing, these would be valued at a total of $3.84 million, which is just 15% or so of the amount lost. XTK prices have dumped 50% since the exploit last week.

DeFi hack postmortem

The Rekt Blog has carried out its usual post mortem of the attack, revealing that the hacker took out a flash loan on the dYdX exchange totaling 61,833 ETH or around $267 million.

The attacker used Flashbots miner extractable value (MEV), a measure devised to study consensus security by modeling the profit of a miner or validator. Several transactions were carried out to deposit, borrow, swap, sell, and repay loans before the loot was made off with.

xToken is one of a number of DeFi protocols that have decided to compensate their users following a major security breach or system exploit. Others include Rari Capital which was hacked on May 8 again using flash loans from dYdX.

Protocol founder, Jai Bhavnani, stated that there was a plan to use some of the developer funds in order to recompense the victims. Around two million Rari Governance Tokens (RGT) that were previously allocated to protocol contributors and ecosystem expansion have been used for compensation.

At the time of writing XTK was trading down 4.7% on the day at $0.192 according to CoinGecko.

The post xToken Proposes Compensation After $25M DeFi Hack appeared first on BeInCrypto.

 

Source: BeInCrypto

 


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