key takeaways :
- Indexed DAO, hacked for $16 million in 2021, thwarted two recent attempts to hijack its remaining treasury.
- Indexed Finance transitions from defense to restitution
In 2021, Ethereum-based Indexed Finance encountered a significant setback when hackers targeted the platform, resulting in a loss of $16 million. Fast forward to the present, and the Indexed community has successfully thwarted two recent hijacking attempts on the project’s decentralized autonomous organization (DAO).
In a recent development, the management of the DAO is transitioning back to its original creators, accompanied by plans to utilize the remaining treasury funds to compensate victims of the previous year’s hack.
Laurence Day, a former core contributor, took to X (formerly Twitter) to share insights into the relentless efforts of the Indexed community in defending against the two hijacking attempts on the DAO’s remaining treasury.
Both attackers strategically acquired substantial amounts of the protocol’s NDX token, aiming to take control of the DAO’s approximately $120,000 in digital asset holdings through malicious proposals.
The first red flag arose when an attacker, leveraging significant holdings in the NDX token, initiated a covert proposal to seize control. This surreptitious move, devoid of any title or description, nearly slipped under the radar. Fortunately, Day and other members rallied the Indexed DAO community to vote against the proposal. The first attack, which lacked a title or description, was defeated after a concerted effort to mobilize ‘no’ votes just in the nick of time.
However, given that the Indexed team had to publicly mobilize votes against the initial proposal, Day foresaw the possibility of a copycat attack. Moreover, as Day outlined in his thread, an additional vulnerability could expose funds outside the DAO’s treasury to risk if the DAO fell into hostile hands.
In a surprising turn of events, the attacker attempted to negotiate for 50% of the initially targeted treasury, as revealed in on-chain messages. Dillon Kellar, the founder of Indexed, responded by offering $10,000 in DAI stablecoin and issued a stern threat to burn the entire treasury if the attacker did not accept the proposal.
To preemptively address the threat of a subsequent attack, the Indexed DAO approved a “poison pill” proposal, empowering them to burn the remaining treasury funds if necessary to deter potential attackers.
As the DAO management returns to its original creators, the commitment to compensating victims of the 2021 hack underscores the community’s dedication to fostering a secure and resilient decentralized finance ecosystem. This chapter in Indexed Finance’s journey highlights the importance of vigilance and proactive measures in safeguarding digital assets within the rapidly evolving landscape of blockchain technology.
