Sentiment Liquidity Protocol Ensures 100% Reimbursement After Hack

Successful Reimbursement After Cyberattack

The Sentiment liquidity protocol has confirmed the full reimbursement of user funds following a recent exploit. A hacker initially stole $1.09 million in various cryptocurrencies, including USDC, USDT, FRAX, and Ethereum. However, after effective negotiations, 90% of the misappropriated funds have been successfully returned.

Strategic Recovery Efforts

The recovery process was facilitated by independent contributors and insurers like Sherlock and Nexus Mutual. Sherlock covered a significant portion in USDC, while Nexus Mutual has an additional claim pending. Crucially, the Sentiment team decided to cover the remaining losses using their internal treasury, ensuring users faced no financial impact from the hack.

Details of the Exploit

The breach occurred on April 4, 2023, when the hacker exploited the protocol by manipulating a Balancer LP token. This allowed the hacker to borrow against an inflated asset price, resulting in over a million dollars in bad debt. The stolen amounts included $463,920 in USDC, $363,303 in USDT, $125,804 in FRAX, and Ethereum tokens exceeding $152,938.

Comprehensive Recovery Plan

To restore user confidence and operational integrity, Sentiment devised a detailed remediation plan. The funds are being moved to a multi-signature wallet on Arbitrum, after which Wintermute will carry out an on-chain transaction to liquidate the bad debt account. Once completed, users can resume depositing and borrowing activities securely.

Conclusion

The Sentiment liquidity protocol's swift and effective response underscores its commitment to user security and financial integrity. By leveraging strategic negotiations and internal resources, the platform has ensured that all affected users are compensated, reinforcing trust in its operations.