After a devastating hack, a cross-chain DeFi protocol (Decentral Finance) today released a temporary compensation plan for token holders and investors that has been hit by one of the largest exploits in DeFi history.
In a tweet today, EasyFi announced its “Interim Compensation Plan,” a multi-step process that includes instant payments, IOU tokens and incentive programs for victims of the attack.
We would also like to inform you that we have gained new strategic investors and strong backers to expand the protocol operations and business. https://t.co/Gu7FtLcsnc
– @ easyfi.network (@EasyfiNetwork) May 7, 2021
The hack, which took place on April 19, is considered one of the largest in DeFi history, with stable coins valued at $ 6 million and 2.98 million EZ tokens valued at over $ 120 million, which were lost at the time of the attack. However, the hacker found himself in a complicated situation because after exploiting the protocol, he owned more than 30% of the supply of EZ tokens and had limited liquidity to unload. A week later, the token was “hard forked” on EZ 2.0, rendering the attacker’s remaining tokens practically worthless.
In one Tweet From his personal account, EasyFi founder Ankitt Gaur confirmed that the hack was the result of a “targeted attack on the founder’s machine / metamask to access administrator keys and execute the well-planned hack”. This attack vector shares similarities with a 2020 hack on the personal computer of Hugh Karp, the founder of Nexus Mutual, who lost $ 8 million.
An expert from the hack and exploit publication Rekt noted that the theft may have been due to lax security practices, as a single person held the keys to the treasury and was not secured in a wallet with precautions against this type of hack like a multi-signature scheme or time-locked transactions.
In its blog post on the compensation plan, EasyFi characterizes the attack as “well planned” and “sophisticated”.
Regardless of the cause, efforts to compensate victims are varied. For each post, 25% of the lost money is distributed “immediately” to users in the form of stablecoins, while the remaining 75% is distributed as “IOU” tokens. At the time of distribution, the IOU tokens have a discount of 25% on the spot price of EZ and can be redeemed 1: 1 for EZ v2 tokens. Hack victims are also reported to be recipients of future air drops from unspecified partners and have access to other programs that are still under development.
The post also noted that the protocol helped attract new venture capital through an “accelerated” fundraising round after the hack – a round that is still ongoing.
The token is down 4.7% to $ 11.30 today and 33.8% from the week – still from both the hack and compensated investors who may be redeeming their IOUs.
Compensation methods are getting hotter as hacks and exploits continue to plague DeFi. EasyFi’s multi-faceted approach mirrors that of Origin Dollar, while other protocols have opted for creative cross-platform treasury magic over the past few months to ward off attacks.