The decentralized finance (DeFi) aggregator ParaSwap has made a decision to compensate the victims of a hack using funds from its treasury. The ParaSwap decentralized autonomous organization (DAO) proposed the idea of refunding the victims of the AugustusV6 contract vulnerability on April 4. After a voting period of three days, 96.81% of ParaSwap voters agreed with the DAO’s proposed method of compensating users.
The AugustusV6 contract, which was briefly active on March 18, aimed to enhance swapping efficiency and reduce gas fees. However, the contract had a critical vulnerability that allowed hackers to drain funds from users who approved the upgrade.
Although a quick rollback prevented a potential loss of $3.4 million, approximately $864,000 in assets were lost in the process. ParaSwap worked closely with blockchain analytics and security firms Chainalysis and TRM Labs to identify the hacker addresses and track the movement of the funds. The foundation stated that on April 4, around $500,000 worth of assets had been recovered. This recovery reduced the amount of funds still unaccounted for, which were the ones taken from users who deposited into a compromised account, by 63%.
According to ParaSwap, providing full refunds to affected users is a crucial step in ensuring the long-term sustainability of the project.
In March, blockchain security firm PeckShield compiled data showing that nearly $100 million in stolen digital assets from hacks were recovered. Despite the significant losses, 52.8% of the hacked funds were returned. The majority of the recovered funds came from a security incident involving the nonfungible token (NFT) game called Munchables, which operates on the Blast network.
Overall, ParaSwap’s decision to compensate hack victims using funds from its treasury showcases its commitment to the security and well-being of its users.