Nemo Protocol, a decentralized finance protocol on the Sui blockchain, has announced a compensation plan for users affected by a $2.6 million exploit earlier this month.
The blog titled ‘User Asset Recovery & $NEOM Debt Token Program V1.0’ revealed that the plan involves issuing debt tokens known as NEOM, which symbolize the value of users’ losses in terms of USD. This is being done since the platform lacks funds to compensate users directly.
Compensation plan: NEOM debt tokens
Under the plan, the platform will issue NEOM debt tokens, with each token equalling $1. The post reads, “Our goal is to make every user whole by issuing a debt token equal to their loss in USD, with the understanding that its value may change over time depending on market conditions and the progress of fund recovery.”
Nemo has also introduced measures to secure user funds:
- Users can move their remaining assets from compromised pools to new, secure smart contracts with a single click.
- Users receive NEOM debt tokens equal to their loss in USD when claiming their migrated assets.
The users can choose if they want to go for an immediate AMM exit or continue to hold their NEOM while waiting for the hacked funds to be recovered. The post also stated that there will be “a dedicated, one-stop portal developed specifically for affected users.” Through this, they can check their eligibility for the tokens and claim them. The NEOM tokens will be airdropped proportionally directly into the wallets of the affected users.
The $2.6M hack
On September 7, Nemo Protocol suffered a hack that drained $2.6 million from its liquidity pools. The platform quickly paused operations and took an on-chain snapshot to calculate users’ losses fairly.
The breach has occurred due to two main issues. First, the developer deployed a new feature without adequate audits, such as a public flash loan feature and a query function that was able to change contract data. Both of these were manipulated by the attacker.
Second, the platform’s governance permitted an individual developer to deploy code unaudited, and alarms issued by auditors were disregarded.
Nemo said they will set up a dedicated website to track the NEOM burn progress, so the community can monitor real-time updates on the initiative.
Also Read: Hacker Exploits Bitcoin-based Yala Protocol’s Yu Token on Polygon
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