Balancer Unveils $8M Reimbursement Plan Post Exploit
In the aftermath of a massive $128 million exploit targeting its V2 pools, decentralised finance protocol Balancer has announced a detailed $8 million reimbursement plan for affected liquidity providers (LPs). The move aims to restore funds and repair trust within its user community.
Insights Into the Balancer Exploit
Taking place in early November, the hack exploited a rounding function flaw in Balancer’s Composable Stable Pools (CSPv5). By leveraging batched swaps, attackers manipulated token price calculations and depleted pools across Ethereum, Polygon, Base, and Arbitrum chains. Despite comprehensive security audits from four reputable blockchain firms, the vulnerability went undetected until it was exploited.
The Recovery Effort
Following the incident, Balancer acted promptly by pausing portions of its protocol to prevent additional losses. In collaboration with whitehat hackers and internal teams, approximately $28 million of the stolen $128 million has been recovered. Key highlights of their recovery efforts include:
- Whitehat hackers retrieved $3.9 million, including $2.68 million from Polygon-based pools.
- Internal recovery initiatives salvaged $4.1 million from unexploited metastable pools.
- $19.7 million in osETH and osGNO tokens was reinstated via StakeWise, an Ethereum liquid staking protocol.
The Reimbursement Framework
Balancer’s reimbursement plan focuses on the $8 million recovered through internal efforts and whitehat contributions. Here’s how the plan will work:
- Funds will be distributed on a non-socialised, pro-rata basis to LPs holding Balancer Pool Tokens (BPTs) at a snapshot block taken prior to the exploit.
- Reimbursements will be distributed in-kind, allowing users to receive the same token types they lost.
- Whitehat contributors who assisted in fund recovery will receive a 10% bounty of recovered funds, capped at $1 million per operation, subject to completing KYC verification.
Key Dates and Legal Details
Once the plan is approved by the Balancer DAO through a formal voting process, LPs will have a 180-day window to claim their funds. Affected users will need to accept Balancer’s updated terms of use, absolving the platform, its DAO, and affiliated parties from legal liabilities related to the breach. Unclaimed funds post-deadline will be subject to redistribution via governance votes.
Rebuilding Trust in the DeFi Community
Despite the exploit’s significant impact, including a 30% drop in Balancer’s native BAL token value and a sharp decline in total locked value to $258 million, this reimbursement initiative reflects Balancer’s commitment to accountability and protecting its user base. Such efforts underscore the importance of robust governance and collaborative recovery frameworks in rebuilding trust within the DeFi sector.
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