The Curve Finance decentralized finance (DeFi) community has recently voted to implement a significant reimbursement plan for victims of a July security breach.
In this resolution, a substantial 94% of Curve’s token-holders agreed to compensate liquidity providers (LPs) who suffered financial losses in the $61-million hack.
This decision, confirmed by on-chain data on December 21, paves the way for a distribution of over $49.2 million worth of tokens to those affected by the incident.
Curve Finance Commits to Comprehensive Hack Compensation Plan
In response to a substantial security breach in July, Curve Finance’s DeFi community has made a significant move to mitigate the damage. Recently, an overwhelming majority of Curve’s token-holders, about 94%, cast their votes supporting a reimbursement plan for liquidity providers (LPs) affected by the $61-million hack.
This decision, verified by on-chain data as of December 21, initiates the process of distributing over $49.2 million in tokens as compensation.
The structured reimbursement approach is set to cover losses in various pools, including JPEG’d (JPEG), Curve (CRV), Alchemix (ALCX), and Metronome (MET).
The compensation calculation takes into account the Ethereum and CRV tokens held in these pools at the time of the hack, along with the CRV emissions that LPs missed during the subsequent months.
The necessary CRV tokens for this reimbursement will be sourced from the Curve community fund. Additionally, the total compensation amount has been adjusted to reflect the recovery of some tokens after the hacking incident.
Community Response to Curve Finance’s July Hack and its Aftermath
The Curve Finance community has actively engaged in formulating a response to mitigate the fallout. This incident, which exposed vulnerabilities in several DeFi protocols, has had a notable impact on the wider cryptocurrency ecosystem.
At the time of the breach, Curve Finance’s total value locked (TVL) was close to $4 billion, with pools such as CRV/ETH, alETH/ETH, pETH/ETH, msETH/ETH and being affected.
Despite the recovery of a substantial portion of the stolen funds, these pools continued to suffer losses, primarily due to the activities of Maximal Extractable Value (MEV) bots. In an effort to address these deficits and ensure fair compensation for the affected LPs, the Curve community has proposed a reimbursement plan.
This initiative is focused on restoring the balances of the impacted pools and maintaining the integrity of the Curve Finance ecosystem.
The recent incident at Curve Finance and the swift response from its community have brought to light the ongoing challenges and heightened responsibilities within DeFi protocols. This situation has emphasized the crucial need for stringent security protocols and constant alertness to potential threats.