Rari Capital Dedicated to $26M from Developer Fund For Hack Victims Compensation Plan

By Robin Wong | May 11, 2021

After undergoing a $10 million hack over the weekend, decentralized finance protocol Rari Capital is coming up with a compensation plan to financially support its customers. 

Specifically, as revealed via an official postmortem of the exploit on May 9th, the platform suffered financial damage equalling 2,600 Ether (ETH) – equivalent to 60% of every users’ fund in its Rari Capital Ethereum Pool. Rari enables automation for its yield farming via rebalancing users’ funds and pools.

Rari founder Jai Bhavnani reportedly disclosed that every protocol contributor cast their votes to send back the 2 million Rari Governance Token (RGT), previously dedicated to developer’s initiatives back to the project’s decentralized autonomous organization (DAO), for the reimbursement of users suffering from the hack. 

Details of the distribution plan are reportedly still in the works by Rari Capital’s developers and community, Bhavnani reportedly claimed that tRGT token holders will have the eligibility to acquire a share of the DAO’s stablecoin reserves.

With the existing trading value for RGT reportedly standing at $13.36, the overall funds dedicated to the reimbursement will be equalling to approximately $26.7 million. 

The Rari Capital Ethereum Pool reportedly makes deposits of ETH into Alpha Finance’s ibETH token, as included in its yield-generating methods. The hacker applied contract manipulation to withdraw additional funds compared to their initial deposit sum. 

A flash loan was generated from the exchange dYdX in an effort to deposit ETH and make repeated withdrawals, draining the pool in the process.

The Rari Capital attack reportedly took place after a few recent significant exploits throughout the DeFi sphere, including ForceDAO losing $367,000 in April this year, and cross-chain DeFi protocol EasyFi losing up to $60 million on April 20th.

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