1inch proposes $768K exploit compensation – DAO voting on 1IP-80 now live with strict claim rules: KYC, police report, and on-chain proof.
Unusual Compensation Terms for DeFi – Key Features of 1inch’s 1IP-80 Proposal
1inch Foundation has submitted a DAO governance proposal to compensate users following the 1inch frontend exploit that occurred on October 30, 2024. If you’re not familiar with the concept of a DAO or the core mechanics of DeFi platforms, I highly recommend you do so and unlock new opportunities within the crypto environment.
As a reminder, the exploit was caused by a vulnerability in the Lottie Player library used in the 1inch interface. Malicious code replaced the aggregation function, allowing attackers to steal user funds through a supply chain attack. Although 1inch Foundation didn’t recover the funds as quickly as Bybit after its third-party service attack – it’s worth noting that 1inch infrastructure and processes are quite different.
Now, there are several mandatory requirements for participating in the compensation program, specifically:
- users must provide verifiable transaction hashes
- complete KYC identity verification
- submit documented proof of a police report
- and waive any future claims to funds if recovered through investigation
The Foundation will handle all aspects of user verification, communication with law enforcement, and USDC distribution. If stolen assets are recovered later, they will be returned to the DAO – not to the compensated users. Formally, this represents a transfer of financial and legal execution from the DAO to a centralized structure operating within a compliance framework. 1inch Foundation states that its infrastructure is already adapted for such operations and offers“regulatory compatibility.”
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Conclusion
This is quite an unconventional decision for DeFi – offering compensation only under conditions of centralized verification and legal formalities. How this will impact the voting process and whether users will accept such terms remains to be seen. We’ll continue to monitor the outcome. Stay cautious and stay tuned for further updates in crypto, blockchain, and DeFi.
