ParaSwap DAO members have just agreed on a proposal to compensate the victim of its hack that happened in March 2024.
After losing approximately $900,000, users will be compensated using the DAO’s treasury fund.
ParaSwap DAO Agrees to Compensate Users
The voting was done from April 4th, 2024 to April 6th, 2024 to swiftly compensate the victim of the platform’s hack.
The hack took place on March 20th, 2024 where it is recorded that the platform lost nearly $900,000 of user’s money.
The proposal was submitted on April 4th and was quickly agreed on by the members of the DAO which uses the PSP Token to vote.
There were 96.81% of all the votes that agreed on the proposal, which exceeds the threshold of 51%.
The voting was done by using 151 Million tokens, which exceeds the minimum requirement for the proposal to be agreed on.
The minimum vote that needed to be counted was 25 Million tokens, which means that almost all the members of the DAO agreed on this proposal.
Aside from the 96.81% of the holders who agreed on this proposal, 2.77% chose to abstain from this proposal, while 0.42% chose to go against it.
However, that does not matter as the proposal has been agreed on and is ready to be implemented by the DAO automatically.
Details are yet to be published on how the victims can claim the recovery funds. Further information can be accessed from the Twitter account of ParaSwap
Close to $900K Hacked Due to Upgrades
The hack happened because of a new upgrade that was implemented to make the platform more efficient by introducing a swapping efficiency mechanism and a reduced gas fee option.
This was all done to create an enhanced experience for users, which backfired as the upgrades had vulnerabilities in them that were exploited by the hackers.
ParaSwap itself is a decentralised finance or DeFi platform that can be used as an aggregator as well as a swap platform to swap tokens. It is similar to SushiSwap, as it is also an aggregator and a swap.
This means that a lot of liquidity was travelling through the platform as it is an aggregator for many platforms.
The hack itself originally took almost $4.3 Million of users’ money and all the liquidity on the platform.
But, the team behind ParaSwap was quick to react as they recovered $3.4 Million through a white hat operation, but left out almost $900,000 of unrecovered funds that were taken by the hackers.
This incident has reminded us that even though there are new platforms in the crypto market, it does not mean that it is necessarily safer than older ones.
Newer platforms tend to focus on scalability more than security, which can be a huge concern by looking at stories like this, that caused users their funds.
Aside from that, this story also highlights the importance of a DAO, where when a platform has its own DAO, anything can be done quickly through an agreement by the members.
Victim compensation is part of the benefits that come from DAOs as they can provide ease when incidents like this happen, which proves that in a decentralised world, when users lose money on the platform, it does not always necessarily mean that it cannot be recovered, even though most times they can’t.
