Sentiment Protocol to Reimburse Users 100% of Funds Lost to Exploit

In an exciting turn of events, the Sentiment liquidity protocol has announced today on Twitter that users affected by a recent exploit in the protocol will be reimbursed 100% of their lost funds.

Notably, the fund recovery was facilitated by a group of independent contributors, with Sherlock covering $49,275.77 in USDC and an additional $16,425.26 pending from Nexus Mutual, bringing the total insured amount to $65,701.03.

Additionally, the Sentiment team negotiated the return of 90% of the funds misappropriated from the hacker. The team also decided to use internal treasury to provide the difference of the recovered funds to make users whole.

100% of user funds have been successfully recovered. The post below explains a detailed remediation plan for making Sentiment users whole.

Special thanks to @wintermute_t for their help in this process. https://t.co/Oyk17MyMrZ

— Sentiment (@sentimentxyz) April 7, 2023

On April 4, 2023, the Sentiment protocol suffered a hack resulting in the unauthorized extraction of user funds. The exploiter manipulated a Balancer LP token and exploited the Sentiment protocol to borrow against a maliciously inflated asset price, leaving their Sentiment account with approximately $1,092,191 of bad debt.

The hacker stole $463,920, $363,303, and $125,804 in USDC, USDT, and FRAX stablecoins, respectively — including Ethereum tokens worth over $152,938.06. However, after negotiations, the exploiter returned 90% of the funds misappropriated, totaling $872,724.60.

The recovery process will see the funds in the ETH mainnet moved to a multi-sig on Arbitrum and exchanged for the equivalent of the debt assets. Then, Wintermute, a well-known market maker, will initiate an on-chain transaction to liquidate the bad debt account. After completion, users will once again be able to deposit funds and borrow assets.

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