Whales lose out big on Fei Labs’ Fuse hack refund proposal

Whales lose out big on Fei Labs' Fuse hack refund proposal

Fei Labs has released a proposal to compensate the victims of the Fuse hack that occurred back in April, where an attacker was able to steal nearly $80M from various Rari Fuse pools. 

A few months after the incident, the team is finally coming up with a solution. However, it is not being well received by the community – especially the whales.

The proposal details the plan to allow $FEI redemption for wrapped $DAI and a pro-rata distribution of remaining DAO-controlled assets to the $TRIBE holders. 

$FEI is an algorithmic stablecoin with a collateralization rate of over 90%, and $Tribe is the governance token of Fei DAO. 

Fei Labs stated that it is committed to returning all unvested team tokens to the community. 

However, not all affected users by the Fuse hack were satisfied after reading the proposal. 

While the majority of the victims are repaid, the whales’ compensation is insignificant. 

Sam Kazeimian, founder of Frax Finance, affirmed that the DAOs that incurred big losses, including Frax Finance ($13m) and Olympus ($8.9m), are getting 2% and 3%, respectively, of the funds they lost if the proposed distribution is accepted. 

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Refund allocations

The proposal suggests allocating more funds from the protocol treasury to $TRIBE holders than to the affected whales.

A few days after the Rari Fuse pools exploit, the protocol offered $10M to the hacker in exchange for the stolen funds. 

The hacker didn’t respond, putting Fei Labs in a delicate situation. 

The founder of Frax Finance also stated that he tried to contact @joey__santoro, a core team member of Fei Labs, to discuss the incident for several months without success.

It is unclear what exactly will happen. However, Fei Labs claimed they’d respect the $TRIBE holders’ decision and consider the feedback received. 

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About the Author
Armando Sebi
Armando Sebi
Armando is a DeFi analyst that started his crypto journey in 2021. He is passionate about cryptocurrencies and the future of decentralized finance.