ParaSwap DAO Funds Hack Victims’ Compensation

ParaSwap, a decentralized finance (DeFi) aggregator, has made a decision to compensate victims of a recent hack using funds from its treasury. The ParaSwap decentralized autonomous organization (DAO) put forth the proposal on April 4 to refund those affected by the vulnerability in the Augustus V6 contract. After a voting period, 96.81% of ParaSwap voters agreed to compensate the users in the suggested manner.

The Augustus V6 contract had been launched on March 18 in an effort to enhance swapping efficiency and minimize gas fees. Unfortunately, it contained a critical flaw that allowed hackers to drain funds from users who had approved the upgrade. Despite taking swift action to prevent the loss of $3.4 million, approximately $864,000 in assets was still lost during the incident.

In response to the hack, ParaSwap worked closely with blockchain analytics and security firms Chainalysis and TRM Labs to track the movements of the stolen funds and identify the hacker addresses. The ParaSwap Foundation has taken responsibility for covering the costs associated with the vulnerability, which includes the refunds, engaging security analysts, conducting extensive contract re-audits, communicating with authorities, and executing the refund process.

On April 4, ParaSwap announced the successful recovery of around $500,000 worth of assets, resulting in a 63% reduction in the amount of unaccounted funds. The project sees offering full refunds to affected users as crucial for its long-term sustainability.

According to data from blockchain security firm PeckShield, out of the roughly $100 million in digital assets that were stolen in March hacks, 52.8% have been successfully recovered. The majority of the recovered funds came from a security incident involving an NFT game called Munchables, which is based on the Blast network.

This decision by the ParaSwap community to compensate victims using treasury funds showcases their commitment to protecting and supporting their users. It also serves as a reminder of the importance of thorough audits and security measures in the DeFi space to prevent such incidents from occurring in the future.