Progress on Balancer security incident, DAO begins discussion on $8 million recovery plan

According to CoinDesk, after the Balancer v2 vault was attacked due to a major vulnerability, resulting in the loss of over $110 million in funds for several weeks, the Balancer DAO has begun discussions on a plan to allocate approximately $8 million of recovered assets to affected LPs.

The proposed plan includes providing structured rewards for white hat hackers and compensating users based on a snapshot of user pool assets at the time of the exploit, in accordance with the "Safe Harbor Agreement." This agreement stipulates a bounty cap of $1 million per incident, and white hat hackers must complete comprehensive KYC and sanctions screening. Several anonymous rescuers on Arbitrum have waived their claims to the bounty. The recovered tokens cover networks such as Ethereum, Polygon, Base, and Arbitrum, and liquidity providers will be compensated in proportion to the tokens they initially provided. A claims mechanism is currently being developed, and if the proposal is approved, users will need to accept the updated terms of use.

Additionally, $19.7 million of osETH and osGNO was recovered by StakeWise and will be handled separately; $4.1 million recovered in collaboration with Certora does not qualify for the bounty due to a prior agreement. This exploit was caused by a smart contract flaw, marking the third major security incident for Balancer, and led to a total locked value (TVL) plummeting from about $775 million to $258 million, while the value of the BAL token also lost approximately 30%.