At last ! Raydium Protocol users will obtain compensation after the loss of their cryptocurrencies. On December 16, a hacker exploited a security flaw in Raydium’s network. It is estimated that he was able to take away around $4.4 million during the hack at Raydium.
Hacking at Raydium: Back to an incredible theft
It is often quite disturbing how easily cryptocurrency thefts can be carried out. They are owned by entities much less protected than banks. However, cryptocurrencies represent the same value as the money in euros that we have in the bank. The hacker who raged at Raydium first obtained the private key of the administrator account of the liquidity pool. He then exploited a vulnerability in smart contracts to embezzle RAY token redemption funds. He thus allowed the administrator account he controlled to steal 4.4 million from Raydium.
While waiting for the hacker to return the stolen funds, Raydium is forced to dip into its reserves to reimburse its users.
The Raydium Compensation Plan
Via his twitter account, Raydium offered a compensation plan to its community. “There should currently be enough cumulative protocol revenue from trading fees to satisfy liquidity providers, should the Raydium community decide to move forward with this proposal,” the Twitter post read.
The company goes on to say: “The main objective is to allocate the necessary funds to satisfy users to the best of Raydium’s ability. Options on the specific process/logistics for compensation will come later. This was not how Raydium envisioned governance to begin with, but this is where we are”.
Following the hack at Raydium, the platform intends to use its RAY tokens to compensate the victim RAY holders. But for other tokens, the community will have to decide how to use Raydium funds to buy them. Discussions that could last for days are ongoing.
Since the bankruptcy of FTX, crypto investors have been very wary of exchanges. But following Raydium’s repair announcement on Twitter, users seemed reassured. We know other thefts of crypto-currencies that ended less well.
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