May 30, 2024
Latest Cryptocurrency News

ParaSwap’s Compensation Plan for Hack Victims Approved

The community behind ParaSwap, a decentralized finance (DeFi) aggregator, has taken a big step to handle the repercussions of a recent attack.

On April 4, the ParaSwap decentralized autonomous organization (DAO) announced a compensation plan for victims of the AugustusV6 contract vulnerability. Following a three-day voting period, an overwhelming 96.81% of ParaSwap voters supported the DAO’s suggested method of paying consumers.

The Paraswap community voted to reimburse victims using DAO treasury funds. Source: vote.paraswap.network

The AugustusV6 Vulnerability and Recovery Efforts

The ParaSwap AugustusV6 contract, which was launched on March 18 with the goal of increasing swapping efficiency and lowering gas expenses, unintentionally exposed users to a severe vulnerability.

Hackers used this issue to siphon payments from consumers who had allowed the upgrade. Although a fast rewind saved $3.4 million, approximately $864,000 in assets were still lost.

ParaSwap worked working with blockchain analytics and security firms Chainalysis and TRM Labs to identify hacker addresses and track the flow of funds.

The ParaSwap Foundation announced on April 4 that roughly $500,000 worth of assets had been recovered. This recovery effort significantly reduced the amount of funds still unaccounted for, marking a crucial step towards mitigating the impact of the hack.

The Foundation committed to covering the remaining costs associated with the vulnerability, including refunds, security analyst engagement, contract re-audits, communication with authorities, and the execution of the refund process.

Long-Term Sustainability and Recovery Trends

ParaSwap emphasized that providing full refunds to affected users is integral to the project’s long-term sustainability.

This decision aligns with broader industry trends, as evidenced by the recovery of nearly $100 million in digital assets stolen in March hacks, with 52.8% of hacked funds successfully returned as per data from PeckShield. Notable among these recoveries was the incident involving the NFT game Munchables on the Blast network.

Total hack losses in 2024 by month. Source: PeckShield

As ParaSwap and other projects continue to navigate the evolving landscape of DeFi security, community-driven initiatives like compensation plans underscore the industry’s commitment to resilience and user protection.

Image by freepik

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