Balancer Unveils Reimbursement Strategy Following $128M Exploit

Decentralized finance (DeFi) protocol Balancer has announced its plan to reimburse liquidity providers affected by the recent $128 million exploit on its V2 pools. The proposal details how approximately $8 million in recovered assets will be distributed.

Recovery Efforts and Funds Distribution

The exploit, which impacted multiple chains, led to emergency pauses and whitehat interventions. Balancer has managed to salvage approximately $28 million through various efforts, including whitehat rescues and internal recovery operations.

The current reimbursement plan focuses on the $8 million recovered directly by whitehats and Balancer's internal teams. StakeWise, another protocol, will separately handle the return of approximately $19.7 million in osETH and osGNO to its users through its own governance process.

Key Aspects of the Reimbursement Plan:

• Non-Socialized Approach: Recovered funds for each affected pool will be distributed only to liquidity providers of that specific pool and network. Losses won't be spread across all Balancer users.
• Proportional Distribution: Distributions will be based on holdings at the snapshot block taken right before the initial exploit transaction.
• Whitehat Bounties: Whitehat rescuers will receive a 10% bounty, capped at $1 million per operation, after completing legal ID disclosure, KYC checks, and sanctions screening.
• Internal Rescues: Balancer's internal rescue operation, coordinated with Certora, recovered $4.1 million from vulnerable metastable pools. These funds are not eligible for SEAL Safe Harbor bounties as Certora operated under an existing service agreement.
• Claiming Mechanism: Claimants will need to provide digital proof of consent to Balancer's terms and conditions, releasing Balancer Labs, Balancer DAO, Balancer Foundation, and affiliated parties from related liabilities.
• Claim Period: There will be a 180-day claim period. Unclaimed assets after this period will be considered dormant and require a subsequent governance decision for reassignment.

Key Takeaways:

• Balancer is taking steps to compensate users affected by the recent exploit.
• The reimbursement plan focuses on direct recovery efforts and avoids socializing losses across the entire platform.
• Whitehats are being incentivized for their contributions to fund recovery.
• A clear claiming process and timeline have been established.