Following the $12M hack, here’s how Defrost Finance plans to refund users

In order to determine who owned what before the attack, the Defrost team will scan on-chain data.

The decentralized leverage-trading platform Defrost Finance plans to return funds lost in a recent flash loan exploit to their rightful owners, according to a recent announcement.

In a Medium post, Defrost highlighted that it will soon be refunding the assets to their original holders and will follow a specific process. All Ether (ETH) will be converted into stablecoins, like Dai (DAI), at the on-chain market rate. After that, all stablecoins will be transferred from Ethereum to Avalanche.

The Defrost team will also scan on-chain data to determine “who owned what” before the attack. After completing the scan work, the team will release the data to the public.

Once everything is ready, the team will deploy a smart contract so that users can reclaim their stablecoins back to their original wallet addresses.

Meanwhile, security firms alleged that the project may have ran away with user funds after the exploit. The blockchain security firm CertiK said the recent exploit was an “exit scam” and they tried contacting the team, but did not receive a response. Additionally, blockchain analytics firm PeckShield warned the community of the project, calling it a “rug pull” and estimating losses of around $12 million.

The decentralized exchange Raydium announced details of a compensation plan for victims of a recent exploit resulting from a vulnerability in the platform’s code on Dec. 21. It is estimated that the hackers managed to steal $2 million worth of digital assets during the attack, according to its team.

On the same day, Ankr protocol was able to determine the details of the exploit that caused a $5 million loss within the platform. According to the team, there was a point of failure in their developer key. As a result, the team will implement multi-sig authentication and require key custodians to sign off on the authentication.