For unsatisfied investors, stablecoins, IOU tokens, and upcoming incentive schemes are on the horizon.
A cross-chain decentralized finance (DeFi) system has today disclosed a temporary compensation scheme for token holders and investors affected by one of the biggest exploits in DeFi history following a devastating hack.
EasyFi today tweeted about their Interim Compensation Plan, a multi-stage procedure that includes cash reimbursements right away, IOU tokens, and incentive schemes for attack victims.
The attack, which happened on April 19, is regarded as one of the biggest in DeFi history, with $6 million in stablecoins and 2.98 million EZ tokens valued at more than $120 million lost at the time of the attack. The hacker was in a difficult position, though, as there was no liquidity with which to unload them after they had taken advantage of the protocol and possessed upwards of 30% of the available EZ tokens. A week later, the token underwent a hard fork to EZ 2.0, thus making the attacker’s remaining tokens useless.
Ankitt Gaur, the creator of EasyFi, acknowledged the hack in a Tweet from his account, stating that it was the result of a targeted attack on the founder’s computer or MetaMask to obtain admin keys and carry out the meticulously planned hack. Hugh Karp, the founder of Nexus Mutual, lost $8 million as a result of a cyberattack in 2020 using a similar attack vector.
A specialist from the hack and exploit publication Rekt acknowledged that the theft might have been the result of poor security procedures because only one person had access to the treasury instead of being secured in a wallet with safeguards against this type of hack, like a multi-signature scheme or time-locked transactions.
The efforts to recompense victims are extensive and vary depending on the cause. According to their post, customers would receive 25% of lost funds as stablecoins right once, and the other 75% will be given to them as IOU tokens. The IOU tokens will have a 25% discount on the spot price of EZ at the time of distribution and will be exchangeable one-for-one for EZ v2 tokens. Additionally, it has been revealed that hack victims will get upcoming airdrops from unnamed partners and have access to additional incentive-based initiatives that are still in the works.
The article also mentioned how the protocol was successful in luring additional venture capital via an immediate fundraising round after the hack, which is currently continuing.
The token is still reeling from the hack as well as the possibility of paid investors cashing in their IOUs, down 4.7% today to $11.30 and down 33.8% for the week.
As hackers and exploits continue to plague DeFi, compensation strategies are becoming a popular issue. EasyFi’s multidimensional strategy is similar to Origin Dollar‘s, although other protocols lately have opted for inventive cross-platform treasury wizardry to reduce attacks.