The Curve Finance decentralized finance (DeFi) community has made a significant decision to provide compensation to liquidity providers (LPs) who suffered losses during a $61 million hack that occurred in July.
On December 21, a resounding 94% of tokenholders voted in favor of disbursing tokens valued at more than $49.2 million.
These tokens will be used to cover the losses incurred across various pools, including Curve (CRV), JPEG’d (JPEG), Alchemix (ALCX), and Metronome (MET).
The calculation of these losses takes into account the value of Ether and CRV tokens in the affected pools before the hack, as well as the missed CRV emissions that would have been distributed to LPs over the preceding months.
The plan is for the Curve DAO (CRV) tokens to be provided from the community fund to cover these losses, with adjustments made for any tokens that have been recovered since the incident.
The proposal outlines the specific figures: “The overall ETH to recover was calculated as 5919.2226 ETH, the CRV to recover was calculated as 34,733,171.51 CRV, and the total to distribute was calculated as 55,544,782.73 CRV.”
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The security breach took place on July 30, causing concerns within the DeFi ecosystem due to its impact on various protocols.
At the time, Curve had a total value locked (TVL) of nearly $4 billion. The affected pools included alETH/ETH, pETH/ETH, msETH/ETH, and CRV/ETH.
Curve emphasized in its proposal that although some stolen funds had been partially or completely recovered, the use of MEV (Miner Extractable Value) bots had left the impacted pools with a shortfall.
The proposed remedy aims to make the affected LPs whole again.
The attacker had exploited a vulnerability in stable pools by targeting specific versions of the Vyper programming language.
Vyper is a popular choice among DeFi protocols because it is designed for the Ethereum Virtual Machine. The bug in versions 0.2.15, 0.2.16, and 0.3.0 of Vyper made them susceptible to reentrancy attacks.
In summary, the Curve Finance community has taken a significant step towards compensating LPs affected by the July hack, with tokenholders voting overwhelmingly in favor of the disbursement.
This move aims to rectify the losses incurred and bring relief to the impacted DeFi pools.
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