Balancer Proposes $8 Million in Fund Distribution to Users Affected by Exploit

• Balancer proposes $8M distribution to users affected by exploit.
• White hats recover millions, earn bounties for Balancer exploit rescue.
• Affected liquidity providers to receive pro-rata funds from Balancer.

Balancer, a decentralized exchange and automated portfolio manager, is moving forward with a proposal to distribute approximately $8 million to users impacted by a major exploit earlier this month. The exploit drained over $128 million from Balancer’s vaults. According to the proposal, the $8 million will be allocated to liquidity providers (LPs) who were directly affected by the attack.

The funds have been recovered through a combination of white hat interventions and internal rescue operations. While a total of $28 million was salvaged, approximately $19.7 million in osETH and osGNO is currently being managed by StakeWise, a liquid staking protocol.

The reimbursement model, outlined in the proposal, follows a non-socialized approach, meaning that only the affected LPs will receive the funds. The distribution will be pro-rata, based on the Balancer Pool Token (BPT) holdings at the time of the exploit.

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White Hat Contributions and Bounties

The proposal also addresses the role of white hats who played a key part in the recovery process. A total of six white hat actors successfully recovered about $3.86 million during the exploit.

These actors will receive bounties, with each bounty capped at $1 million per operation. The largest recovery came from a white hat known as “Anon #1,” who salvaged $2.68 million on the Polygon network. Other contributors include security researcher Bitfinding, who recovered $963,832 on Ethereum mainnet, with smaller amounts recovered on Base and Arbitrum.

To claim their bounties, white hats will undergo identity verification, know-your-client checks, and sanctions screening under Balancer’s SEAL Safe Harbor Agreement. Interestingly, the Arbitrum-based rescuers have opted to waive their bounties by declining to disclose their identities.

Claim Window and Future Decisions

Balancer’s proposal includes a 180-day claim window for users and white hats. After this period, any unclaimed assets will be considered dormant. The proposal specifies that any unclaimed funds will require a governance decision for potential reallocation. This 180-day window is set to provide ample time for affected LPs and white hats to make their claims, ensuring that the process remains transparent and organized.

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