The Ethereum Layer-2 Project Kinto is closing this month, after an exploit that took place in July depleted its reserve funds and the team was unable to find new funding.
You can read more about it here:
- After announcing a closure following a July exploit which drained over 577 ETH, Kinto’s price fell by more than 80%.
- Phoenix will be able to recover 76% of the funds while hackers are entitled to $1,100 in goodwill.
- There are still withdrawals available until 30 September, with an Ethereum airdrop and claim contract planned for Oct.
Kinto made an announcement on X on september 7 that they will close their operations at the end of September. This follows a July exploit which drained approximately 577 ETH, worth $1.9million. The team was unable to recover.
After the announcement, the K token of the project dropped 85% within 24 hours. It is now down 94% over the course of the month.
The exploit through to the shutdown
An exploitable vulnerability was found in OpenZeppelin’s ERC-1967 Proxy codebase, widely used to create upgradeable smart contracts. On Arbitrum, attackers minted 110,000 Kinto fake tokens.ARBUniswap) to steal funds (UNIMorpho () and liquid poolsMORPHO) lending vaults.
Its “Phoenix Program,” Kinto repaid $1 million of debt to stabilise its operations. But mounting debts and a lack of confidence in investors proved impossible to overcome. Fundraising efforts The team has not received any payment since July.
Kinto’s refund and the next step
Kinto says it has consolidated around $800,000 of remaining assets into a foundation-controlled safe. The funds are first going to Phoenix lenders who should recover 76% of the principal.
Hackers on Morpho can receive up to $1,000 each, from the $55,000 in goodwill funds personally funded by Kinto founder Ramon Recuero. Other recoveries of the stolen EthereumETH), if successful, will be returned to victims and then shared with the community through a Snapshot vote.
The deadline for users to withdraw their assets from Kinto Layer-2 is September 30. A claim contract, which will allow users the ability to recover their funds in October on Ethereum’s mainnet, will then be implemented. On Oct. 15, the scheduled ERA Airdrop will continue to be given out.
DeFi
Kinto’s closure is only one example. risks The challenges that Layer-2, DeFi, and especially those projects that depend on smart contracts that can be upgraded, are. This exploit has led to renewed calls for tighter security, improved treasury and yield models.
Kinto is determined to return what it has borrowed. “We’ll shut down responsibly, return what we can today, and keep fighting for recoveries tomorrow,” The team discussed X.
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Source: crypto.news
