Balancer outlines reimbursement plan after $128 million hacker attack

Source: PortaldoBitcoin Original Title: Balancer details reimbursement plan after hacker attack of US$ 128 million in cryptocurrencies Original Link: The decentralized finance protocol Balancer outlined a framework to return millions in recovered assets to liquidity providers after an exploit that drained over $128 million from its V2 pools, in one of the largest DeFi attacks of the year.

The plan published on Thursday (27) by two members of the Balancer protocol community seeks to gather community feedback on the distribution plans of approximately $8 million in funds, “including both whitehat resGates and internal recovery efforts”.

The discussion arises in the wake of the attack on Balancer earlier this month, which drained millions across five different networks, forced emergency pauses, and led to the intervention of whitehats, also known as “ethical hackers” or “good hackers.”

According to the proposal, approximately $28 million of the stolen funds have been recovered through a combination of ethical interventions, internal resGates, and third-party actions.

“Incidents like this demonstrate the importance of DeFi having clear and real-time visibility of what is happening on the blockchain. The more transparent and traceable the protocols become, the faster the ecosystem can respond, contain damage, and recover funds.”

The structure covers only the US$ 8 million recovered directly by ethical hackers and the internal teams of Balancer, while the Ethereum-based liquid staking protocol, StakeWise, will separately return the remaining US$ 19.7 million in osETH and osGNO to its own users through its governance process.

“The Porto Seguro Agreement, adopted by the Balancer DAO, provides clear terms for interventions by ethical hackers,” the proposal notes, specifying that rewards are paid in the same tokens as the recovered funds and cannot be directly withheld from the retrieved assets.

The proposal adopts a non-socialized approach to reimbursement, meaning that the funds recovered from each affected pool will be distributed only to the liquidity providers of that specific pool and network, rather than spreading the losses across all users.

Distributions will be proportional to the stakes in specific snapshot blocks, collected immediately before the first mining transaction.

According to the platform, rescuers who acted ethically during the attack will receive a reward of 10%, capped at $1 million per operation, after completing identity verification, KYC (Know Your Customer) and sanctions screening.

The proposal identified six ethical agents who recovered approximately US$ 3.9 million across various networks during the exploitation of the vulnerability.

Among them, the anonymous whitehat “Anon #1” led the recoveries, with $2.68 million rescued on Polygon, including 8 million WPOL, 6.8 million MaticX, 2.9 million TruMATIC, and 72,000 stMatic tokens.

Balancer also conducted an internal resGate operation, in coordination with the security company Certora, recovering more than $4.1 million from vulnerable meta-stable pools on the Ethereum, Optimism, and Arbitrum networks, which were at risk but had not yet been exploited.

These internally redeemed funds will not be eligible for the SEAL Safe Harbor program rewards, as Certora operated under a pre-existing service relationship with Balancer, and the agreement specifically encourages external actors rather than coordinated internal responses, according to the proposal.

A claims mechanism will be developed requiring claimants to provide digital proof of agreement with the terms and conditions of Balancer, explicitly agreeing to hold harmless Balancer Labs, Balancer DAO, Balancer Foundation, and affiliated parties from liabilities related to the exploitation.

The plan includes a 180-day claims period, after which unclaimed assets are classified as inactive and reallocated only through a subsequent governance decision.