- Crypto trading platform Cypher has released a strategy to recover from its $1 million exploit, indicating that it will “socialize” losses across the community.
- The protocol will generate money in the second stage of the recovery process through an initial DEX offering.
Crypto trading platform Cypher has released a strategy to recover from its $1 million exploit, indicating that it will “socialize” losses across the community in the initial phase of the recovery.
The Solana-based trading platform will create a “pro rata redemption package” of the present assets in the plan’s first phase, which users will withdraw via a web interface.
Losses will be shared among all accounts in this early stage rather than being borne by one person or organization, as the platform does not currently have enough money to reimburse all depositors.
The protocol will generate money in the second stage of the recovery process through an initial DEX offering (IDO), and this money will be used to pay for audits and additional development.
Users will receive a “debt token” representing the outstanding assets they are due by the protocol at the same time as the IDO. The protocol’s losses from the exploit will eventually be reimbursed to users thanks to this debt token, which will provide them with the right to future USD Coin earnings made by Cypher. The group declared:
“Our foremost priority is to direct funds towards impacted users, underscoring our dedication to rectify their financial losses,”
The team will hire auditors OtterSec and Mad Shield to carry out open audits on the patched version of Cypher once these funds have been returned to find any additional bugs before they become a problem.
The procedure will only be resumed after a thorough assessment that covers every potential vulnerability. The proposal specified that the app’s smart contracts would stay frozen in the interim.
On August 8, the $1 million Cypher exploit took place. Security experts have not yet discovered what caused it. Several centralized exchanges put a freeze on the roughly $600,000 worth of cryptocurrency that was drained in the attack, preventing the attacker from cashing it in. According to Cypher’s announcement, it would make an effort to help consumers recover this cash by working with exchanges or by complying with court-issued search warrants.