Kyber Network Resilience: Cuts & Compensates After $48.8M Setback

Kyber Network, as a decentralized finance (DeFi) protocol, suffered a major setback on November 24, losing a substantial US $48.8 million in an exploit—an amount not seen since the previous year’s first half. It is one of their regrettable cuts ever again! Their workforce, the announcement of the difficult move made by CEO Victor Tran on Dec 24, describes team members breaking up as being part and parcel of business.

In the past month, KyberSwap has faced unprecedented challenges due to the Elastic exploit. Despite this, I am grateful to say that our core business, including the Aggregator and Limit Order functions, remains robust.

Moreover, we will soon be launching our Zap API, an…

— Victor Tran (@vutran54) December 25, 2023

KyberSwap is overcoming challenges by creating a ‘voluntary database’ to assist departing employees. This initiative aims to help them explore new opportunities within the Web3 space. In a bid to manage capital expenditure, the company has temporarily halted its liquidity protocol initiatives and the KyberAI project.

I'm happy that I got the privilege to work together with the Kyber talented team. However, next month I will be a Kyber alumni.

I wish next year I can build on Solana, taking inspiration from one of Kyber alumni like @weremeow https://t.co/2MCTejFJQb

— Jume ◉ (@0xJume) December 25, 2023

Tran reassured the community that KyberSwap’s most important features, such as Aggregator and Limit Exchange, work normally unimpeded. In addition, pending the launch of Zap API, around a month from now, it has already begun to integrate innovation: it allows dApps, wallet projects, and other applications an elegantly designed gateway through which they may access DeFi liquidity protocols.

Moreover, as for the fallout from the exploit, Kyber Network launched an initiative known as the Treasury Grants Program on December 20 to refund users impacted. On Feb 1, 2024 we will send funds as USD stablecoins. Between January 11 and 23, 2024, those affected by the breach must register with restitution.

KyberSwap Treasury Grants: Thank you for your patience while we were finalizing details regarding the KyberSwap Treasury Grant Program for KyberSwap users affected by the KyberSwap Elastic Exploit. Details on the Treasury Grants program have been published. Please find the… pic.twitter.com/vMJtbTa9FP

— Kyber Network (@KyberNetwork) December 20, 2023

Kyber’s $49M DeFi Hack: Exploit, Negotiations

The total reference value for affected users approximates $49 million. Kyber clarified that they would receive 60% of this value. Additionally, front-run bots siphoned an extra $6.6 million after the initial exploit.

Negotiating a bounty deal with the hacker proved futile. They insisted on complete control over Kyber, encompassing assets and governance mechanisms, including KyberDAO. The hacker proposed a fair valuation for acquiring the company, an offer presumably rejected by the Kyber team.

Furthermore, DeFi expert Doug Colkitt shed light on the intricacies of the November 22 hack, characterizing it as an “infinite money glitch” involving a sophisticated smart contract exploit. The attacker targeted KyberSwap pools on various networks, including Avalanche, Polygon, Ethereum, Arbitrum, Optimism, and Base, extracting funds across multiple platforms.

Moreover, KyberSwap, operating on the Kyber Network, remains focused on maintaining key functionalities. The platform is also committed to compensating users affected by the exploit, showcasing resilience in the face of adversity.

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