Cetus Protocol has announced that it will cover user losses by 100% after the $223 million exploit it experienced last week. This compensation process was made possible by a strategic loan from the Sui Foundation.
The Process of the Attack and the First Reactions
In the incident last week, an attacker exploited Cetus' price curves and reserve logic by using fake tokens (BULLA, for example). With this method, he managed to withdraw crypto assets such as SUI, USDC from liquidity pools without investing real valuable assets in the system.
In total, there was a loss of $ 223 million. $162 million of these assets were frozen on the chain. The rest of it was taken out of the network by different means. It was found that there are still 12.9 million pieces of SUI in the attacker's wallet. Other tokens are believed to have been transferred to other networks or converted.
After the incident, Cetus paused its smart contracts and launched a technical investigation. The exchange's local token, CETUS, lost close to 40% in value during this process. During the same period, there was a serious slowdown in DeFi activities on Sui; liquidity decreased, protocol security began to be questioned.
Sui Foundation Loan, Compensation Plan and Community Vote
Cetus has prepared an emergency financial plan to compensate for the damage suffered. In line with this plan, a strategic loan was received from the Sui Foundation. According to the explanation of the protocol, off-chain losses can be fully covered thanks to this loan along with its own cash and token treasury.
But there is another critical step for the payback to be completed: an in-chain vote, which is expected to be approved by the Community. As a result of this governance vote, assets frozen on the chain will also be able to be used for repayments. Thus, a complete compensation process will be initiated.
In a statement on the issue, the Sui Foundation stated that this process is an extraordinary step taken to protect the Sui community. It was emphasized that a full recovery is possible with the support of the community. Cetus, on the other hand, reported that it will start user compensation without wasting time, and the full applicability of the plan will become clear according to the result of the voting process.
This incident experienced by Cetus shows that DeFi protocols are still open to serious security risks. However, the support of the Sui Foundation has been a successful example of community-oriented crisis management in decentralized projects. This process is an important stress test not only for Cetus, but for the entire Sui ecosystem and similar platforms.
