Cypher Announces Recovery Plan After Exploit, Plans To Hold Public Token Sale

Cypher intends to hold a token sale with the aim of recovering from a hack that crippled the Solana-based decentralized exchange earlier this month. The crypto exchange lost upwards of $1 million in various assets when a hacker drained a majority of its protocol on Aug. 7.

Cypher plans to use the proceeds from the token sale to replenish the project's depleted treasury and finance the development of new assets, according to CoinDesk.

"The protocol's continued development and success will be used to make users impacted by the exploit whole over time," the trading platform said in a recent blog post.

In a thread on X, formerly known as Twitter, Cypher said more than 45% of tokens will be sold to the public, while 23% will be reserved for the team. Twelve percent will be allotted to growth incentive programs, 11% to investors and 1.2% to advisors.

Cypher will then airdrop around 7.3% (50 million) of the tokens to depositors who lost money to the hack. The protocol plans to refund affected depositors at a rate of 31 cents on the dollar with the help of the funds not stolen in the hack.

At the same time, the crypto platform is implementing the "socialized losses" mechanism in response to the exploit.

"Socializing losses refers to a mechanism by which the adverse effects of an unfortunate event, like a protocol exploit, are distributed across all users rather than being borne by a few," the blog explained.

Cypher will expedite the initial decentralized offering (IDO) plan, which was originally slated for the end of September to strengthen the platform's financial foundation and compensate those affected by the hacking incident, the trading platform added.

"Before initiating the IDO, Cypher will transition funds from the existing smart contract to a new one. This facilitates the process for impacted users to claim their designated redemption packages," the blog further said.

As part of the recovery plan, the Solana-based trading platform will generate a pro rata redemption package of current assets in its protocol, which users can redeem through a web interface, CoinTelegraph reported.

Meanwhile, Cypher is still attempting to recover the hacked funds from the attacker. It has managed to freeze $600,000 worth of crypto in centralized exchanges (CEXs).

"The return of these funds will be predicated on the cooperation of these CEXs and seizure warrants being issued by law enforcement," the platform noted on X.