Following a $10 million exploit over the weekend, decentralized finance protocol Rari Capital is formulating a plan to compensate victims.
According to an official postmortem of the attack published on Sunday, the platform lost 2,600 Ether (ETH), equal to 60% of all users’ funds in its Rari Capital Ethereum Pool. Rari automates yield farming by rebalancing users' funds and pools.
On Monday, Rari founder Jai Bhavnani posted an update revealing that all of the protocol’s contributors voted to return the 2 million Rari Governance Token (RGT) initially slated for developer incentives back to the project’s decentralized autonomous organization, or DAO, to reimburse users impacted by the hack.
While an exact distribution plan is still being discussed by Rari Capital’s developers and community, Bhavnani noted during a Monday community call that tRGT token holders will be eligible to claim a share of the DAO’s stablecoin reserves.
The DAO currently holds 8.7 million RGT, worth $121.8 million, equating to roughly 1% of RGT's supply,
With RGT currently trading for $13.36, according to Coingecko, the total funds allocated to reimbursement are worth roughly $26.7 million at the time of writing. RGT's price dumped by 44% following the hack, falling from $18 to $10 in less than an hour.
Bhavnani noted the protocol was started as a fair launch project that did not sell tokens or raise money from venture capital firms. He added that the concept of a Rari team has been disbanded, and there are now only contributors and tokenholders.
The Rari Capital Ethereum Pool deposits ETH into Alpha Finance’s ibETH token as one of its yield-generating strategies. The attacker manipulated the contract to withdraw more funds than they had deposited. A flash loan was taken out from the exchange dYdX in order to deposit ETH and make repeated withdrawals, draining the pool in the process.
The Rari Capital exploit follows several recent high-profile hacks in the DeFi sector, including ForceDAO losing $367,000 in early April and cross-chain DeFi protocol EasyFi losing as much as $60 million on April 20.
Rari is not the only protocol seeking to compensate its users, with EasyFi announcing that 25% of lost funds would be distributed to users immediately in the form of stablecoins, while the remaining 75% will be distributed as “IOU” tokens redeemable for EZ v2 tokens.