The decentralized finance (DeFi) protocol KyberSwap, operated by Kyber Network, has faced significant challenges following a $48.8 million exploit in November. As a consequence, the company has had to make the difficult decision to reduce its workforce by 50%, as announced by Kyber Network’s CEO Victor Tran on December 24.
Describing the decision as “heart-wrenching,” Tran explained that this move was necessary to maintain the firm’s business operations. To support the departing employees, Kyber Network plans to establish a “voluntary database” to assist them in finding new opportunities within the Web3 space.
In an effort to conserve funds, Kyber Network has temporarily halted its liquidity protocol initiatives and the KyberAI project. However, Tran emphasized that the core functions of the business, including KyberSwap’s Aggregator and Limit Order features, remain operational. Additionally, he mentioned the upcoming launch of their Zap API, which is expected to enhance the convenience for users accessing DeFi liquidity protocols through various applications and wallets.
Kyber Network is currently focused on reimbursing customers affected by the November exploit. The Treasury Grants Program, initiated on December 20, is part of this effort, with plans to distribute reimbursements (in U.S. dollar stablecoins) by February 1, 2024. Impacted users are required to register for this reimbursement between January 11 and January 23, 2024. Although the total loss from the primary KyberSwap exploit was nearly $49 million, Kyber Network has stated that affected users will receive 60% of this value.
Following the initial exploit, an additional $6.6 million was stolen by front-run bots. The Kyber team attempted to negotiate a bounty with the hacker, who then demanded complete control over the company, including all assets and the governance mechanism, KyberDAO. The hacker proposed to purchase the company at a fair valuation, but this offer was presumably rejected by the Kyber team.
DeFi expert Doug Colkitt described the November 22 hack as a “complex and carefully engineered smart contract exploit” that affected several networks with KyberSwap pools, including Avalanche, Polygon, Ethereum, and layer-2 networks like Arbitrum, Optimism, and Base.
KyberSwap is part of the Kyber Network, a blockchain-based liquidity hub that aggregates liquidity from various blockchains, facilitating token exchanges without the need for an intermediary.
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