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Kyber Network Unveils Compensation Plan for KyberSwap’s Nearly $50 Million Hack

The fallout from the KyberSwap hack in November 2023 continues to resonate within the cryptocurrency community. Kyber Network, the powerhouse behind the decentralized exchange (DEX) platform KyberSwap, has taken an unprecedented step. On December 20th, the network unveiled a comprehensive plan to provide a 100% reimbursement of assets to users affected by the attack.

The breach on November 23rd inflicted staggering losses amounting to over $48 million USD. The attack targeted KyberSwap’s DEX, undermining the confidence and security of its users. Despite efforts by Kyber to negotiate a return of the funds, the discussions failed, leading to the hacker demanding control over the project in exchange for a partial return of the assets.

In a bold stance against capitulation, Kyber Network refused to yield to the hacker’s demands. Instead, they opted to prioritize their users’ interests by committing to compensating all affected individuals in full. This commitment reflects the network’s unwavering dedication to restoring trust and integrity within their community.

Categories of Affected Assets and Compensation Plan

Kyber Network’s strategy involves categorizing affected assets into five groups based on the assets’ status during the attack:

  1. Category 1: Assets taken during the primary exploit, yet to be recovered, valued at nearly $48.9 million USD.
  2. Category 2: Assets taken subsequently by mimicking bots, totaling approximately $172,000 USD.
  3. Category 3: Assets taken by front-run bots, with partial recovery valued at around $6.4 million USD.
  4. Category 4: Assets currently locked due to incorrect pool states, worth $24,478 USD.
  5. Category 5: Assets previously locked but successfully recovered, totaling $706,163 USD.

KyberSwap Elastic Exploit Treasury Grant Program

To facilitate the compensation process, Kyber Network introduced the KyberSwap Elastic Exploit Treasury Grant Program. This program aims to assist affected users who lost assets within Categories 1, 2, and 4. The eligibility criteria for users to qualify for reimbursement are outlined in KyberSwap’s terms of use.

Affected users meeting the eligibility requirements, referred to as “Qualified Affected Users,” will have the opportunity to choose from three options for treasury grants:

  • Option A: 60% of the asset’s reference value, vested over 3 months in USD stablecoins.
  • Option B: 100% of the asset’s reference value, vested over 12 months in USD stablecoins.
  • Option C: Opt-out of the treasury grant.

However, users opting for a grant will need to undergo a Know Your Customer (KYC) process as an additional compliance step before being eligible to receive the grant they’ve selected.

Timeline and Recovery Efforts

A detailed timeline has been provided for the reimbursement process, starting with the UI for selecting grant options going live on January 11, 2024. The selection period ends on January 23, 2024, after which treasury grants will commence distribution from February 1, 2024.

Efforts are underway to recover the remaining Category 3 assets. The KyberSwap team is coordinating the return of recovered assets to affected users, enhancing transparency and visibility by providing updated information on claimable amounts and tokens through their platform.

Conclusion

Kyber Network’s commitment to reimbursing all affected users signifies a pivotal step in restoring trust and reinforcing its dedication to user protection and support. This resolute stance against compromising user interests for the sake of expediency sets a benchmark for ethical response and responsibility within the crypto space.

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