Rari Capital, a decentralized finance (DeFi) project, plans to reimburse users who lost funds when almost $11 million in ethereum (ETH, +8.29%) (around 60% of users’ funds) was drained from its liquidity pool.

  • Rari Capital said the attacker exploited its yield-generating integration with Alpha Finance Labs’ ibETH token.

  • Jai Bhavnani, Rari Capital CEO, explained in a blog post on May 9 that the exploit drained a total of 2,600 ETH (about $10.6 million at the time of writing).

  • The attacker took advantage of a function in the ibETH token to artificially inflate its value, allowing more to be withdrawn than had been deposited, according to a May 9 post-mortem by David Lucid, Rari Capital's lead developer.

  • In his update, Bhavnani said 2 million of the project's RGT governance token, intended to be used to scale the team, would now be offered to reimburse users that lost out to the exploit.

  • "All of the protocol contributors have elected to give that 2M $RGT back to the DAO with the ask of using the newly acquired $RGT to reimburse lost funds and reward those that helped in the war room," he said.

  • In future, Rari Capital will request the protocols it integrates with to review the integrations for security, according to Lucid.

  • He also proposed that deposits and withdrawals are prevented in the same block, or have a timelock applied to prevent funds being drained at speed.

  • From trading at more than $17 prior to the exploit, the Rari governance token fell almost 50% to $9.07 before rebounding. At press time it is sitting at $12.09.

  • The 2 million RGT tokens are currently worth just over $2.4 million.

All writers’ opinions are their own and do not constitute financial advice in any way whatsoever. Nothing published by CoinDesk constitutes an investment recommendation, nor should any data or Content published by CoinDesk be relied upon for any investment activities. CoinDesk strongly recommends that you perform your own independent research and/or speak with a qualified investment professional before making any financial decisions.

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