- Nemo issues debt tokens after $2.6M exploit shakes confidence.
- Users must decide to exit quickly or wait for recovery.
- Redemption pool and transparency aim to rebuild community trust gradually.
Nemo Protocol, a yield-trading platform built on the Sui blockchain, is taking an unusual path to compensate victims of its recent $2.6 million exploit. In another blog post released on Sunday, the team said that impacted users will receive compensation not in the form of stablecoins but in the form of new debt tokens named NEOM.
Every NEOM will be equal to the value of a user’s losses in dollars, which is determined by an onchain snapshot made when the protocol was halted following the attack. Nemo said that direct repayment in USD would have been the best option, but the platform itself is not liquid enough or has not acquired enough capital to take this path, so debt tokens are the best option available.
The exploit was actually discovered by blockchain security company PeckShield on September 7, which stated that 2.6 million had been emptied from the Nemo market pool.
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A later post-mortem by Nemo indicated that the cause of the incident was the weaknesses being added to the code by one of the developers and the deployment without full consideration of audits. These weaknesses enabled the intruder to control the system, and prompted Nemo to shut down the system to start a recovery plan for the users.
A Path Toward Recovery
Nemo’s roadmap to restoration is structured in three steps. First, users will be given access to a migration portal to transfer remaining assets from compromised pools into new, audited contracts managed by multiple parties.
In these processes, they will be given NEOM tokens in accordance with their recorded losses. The holders of such tokens will then be presented with an option either to sell them instantly in an automated market maker pool or to hold onto them as they will recoup the money in the future.
To ease the exits, Nemo will introduce a liquidity pool between NEOM and USDC on a big Sui-based decentralized exchange. The protocol assures that any assets recovered by the attacker will be deposited into a multi-party redemption pool, where NEOM holders can receive their share proportionately.
Nemo will also use liquidity supplied by external loans or strategic investors to support the redemption process. To gain trust, the team will also create a public dashboard to monitor NEOM burn and redemption burn activities in real time.
Although the team stresses that the plan aims to restore each victim to full health, the final price of NEOM tokens will primarily depend on the recovery activities and external assistance. For users, the lingering question is whether the tokens will deliver genuine restitution or simply represent another layer of risk.
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