Decentralized finance (DeFi) protocol Rari Capital lost over $ 10 million in a weekend attack and is now preparing to provide compensation to affected users.
Today, Rari founder Jai Bhavani announced in a post on Medium that he intends to pay RGT tokens intended to incentivize developers to victims of the exploit. Tokens totaling $ 26 million will be transferred to a decentralized organization that will take on the task of paying compensation. The order of distribution of tokens is still subject to approval.
Rari specializes in automating profitable farming and uses a model to rebalance user assets in pools. Commenting on the attack, the developers wrote that the damage from the actions of the attackers amounted to over 2,600 ETH. This corresponds to 60% of the users’ assets held in the Rari ETH pool at that time.
The attack was carried out by manipulating the project’s smart contract, which allowed its organizers to withdraw more assets than they contributed to the pool. The hacker took out a loan in ETH using the flash loan mechanism on the dYdX exchange and passed it through the Rari pool several times using the vulnerability.
The incident resulted in a significant decrease in the value of the RGT token. On Saturday, it traded around $ 17.40, but an hour after the attack, it was already worth $ 9.10. At the time of publication, the RGT price is $ 13.50.
Bhavani emphasized that Rari used a “fair start” model and did not attract funding from venture capitalists. Now the project intends to abandon its own team, whose work was to be encouraged with the help of the mentioned 2 million RGT, and transfer the development of the protocol into the hands of community members.
“I myself become a contributor to the protocol on a par with any other holder of our tokens. If I want to be rewarded for my work, I will have to ask the users running the protocol, ”Bhavani added.
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