KiloEx, a decentralized finance (DeFi) platform, released details of a massive compensation scheme. We welcome this plan and its efforts to protect users affected by the recent security breach. The platform is focused on reimbursing the users who lost money in the exploit. Simultaneously, it is putting into place extensive new security measures to guard against any such attacks occurring in the future. This announcement comes on the heels of a massive crash in the platform's native KILO token and a suspension of trading operations.
Details of the Exploit
A hacker took advantage of a weakness in KiloEx’s smart contract structure to withdraw user funds without authorization. According to blockchain security firm PeckShield, the attack was carried out using a flash loan manipulation strategy. This had the effect of generating fake trading volume that depleted liquidity pools.
Upon discovery of this breach, KiloEx immediately suspended all trading operations. They complemented that effort by immediately launching a deep investigation in partnership with blockchain forensics experts. The platform was able to take a snapshot of user balances prior to the attack. That greatly improved their ability to assess the scope and scale of the losses.
Compensation and Recovery Efforts
KiloEx has since pledged to compensate impacted users in full, with refunds set to be issued in USDT or KILO tokens. Refund distribution is scheduled to begin in the next few weeks. We plan to use protocol reserves to make this small, three-month project possible.
To stabilize the KILO token price, which plummeted over 60% following the hack, KiloEx plans to repurchase tokens from the open market. As an added bonus, the team’s dedication to being sustainable and user protective already aligns with the challenge’s goals! They understand that recent events matter.
Enhanced Security Measures
To avoid a recurrence, KiloEx has already undertaken several steps to improve security. These can range from the application of realtime anomaly detection systems and circuit breakers. The platform is further increasing the scope of its bug bounty program to encourage and reward the finding and reporting of vulnerabilities.
On top of this, KiloEx is going through several 3rd party smart contract audits to find and fix any security issues before they can be exploited. Collectively, these measures speak to KiloEx’s pledge to provide their users with a safer and more dependable trading experience.
