Cypher has issued a plan to recover from the recent $1 million exploit and stated that it would socialize losses across the platform. The platform mentioned that in the first stage of the recovery program, Cypher would produce a pro rata redemption package of the assets it currently possesses. Once that is put into effect, it would become possible for users to withdraw them via a web interface. However, the platform does not possess enough funds to pay back all creditors, so losses would be distributed across all accounts in the initial stage.
In response to our recent exploit, Cypher is fast tracking an IDO.
Here’s the game plan. pic.twitter.com/DFnJFvj4zD
— cypher ©️ (@cypher_protocol) August 23, 2023
When it comes to the second stage of the recovery process, Cypher would raise funds through an initial decentralized exchange offering. These funds would, later on, be utilized to pay for audits as well as additional development. When the IDO occurs, users would be issued a debt token that would represent any remaining assets that are owed by the protocol. This debt token would grant users the right to all USDC profits generated by Cypher in the future. It is widely believed that this move would enable Cypher to pay back all the losses.
The protocol also added,
”Before the exploit, cypher was a leading protocol in Solana’s DeFi resurgence. Then this hack happened. Now the top priority is doing right by our community.”
Cypher to Resume Normal Operations Soon
The team stated that their first priority is to direct funds toward impacted users, which highlights the team’s commitment to rectifying financial losses. As soon as the funds are paid back, the platform will seek the services of auditors to perform public audits on the patched version of Cypher. It was clarified that the main purpose of taking such a step was to discover any bugs before they became a major problem.
After revealing the recovery plan, the platform also let its users know that all normal operations would only resume after an in-depth evaluation, ensuring that all possible vulnerabilities are effectively and efficiently addressed. Until normal operations are resumed, all of the app’s smart contracts will remain frozen.
The $1 million exploit took place earlier this month and security researchers have still not commented on the cause of the exploit. Approximately $600,000 worth of stolen crypto assets were frozen by crypto exchanges which prevented the hacker from withdrawing the funds. However, Cypher announced that it would soon recover these funds with the cooperation of these exchanges as well as law enforcement authorities.