Gnosis Hard Forks Chain to Recover Balancer Hack Funds
Gnosis, a leading blockchain in the DeFi ecosystem, has implemented a hard fork to recover some of the funds stolen in last year's $116 million Balancer hack. This move, aimed at recapturing funds outside the attackers' control, has ignited a community-led recovery effort to restore user assets.
The hard fork took place on Monday and became official after Gnosis notified node operators via X (formerly Twitter) on Tuesday. This hard fork is an extension of the Balancer V2 protocol hack that occurred last November, when the Gnosis chain adopted a soft fork with a majority of validators to counter the attack targeting contracts managed by Balancer.
At the time of the hack, the attackers transferred millions of dollars worth of staked Ethereum (ETH) to a new wallet, resulting in a total loss of $116 million (approximately 171.9 billion won). While approximately $28 million (approximately 41.4 billion won) of this was later recovered by white hat hackers, the majority of the assets remain unrecovered. Funds identified for recovery through the hard fork remain untouched by the hackers, increasing the likelihood of recovery.
โWe are currently focused on safely transferring the funds to the DAO wallet before Christmas,โ said Philippe Schomus, head of Gnosis Infrastructure, in a post on the forum on December 12. โAfter the recovery, we will work out specific measures, including a victim claims process and a compensation system for those who participated in the rescue operation.โ
Balancer Vulnerability Unstoppable Even After 11 Security Audits
Since its launch, Balancer V2 smart contracts have undergone a total of 11 external audits, a lengthy list of security vulnerabilities publicly available on GitHub. Despite these multiple reviews, a critical vulnerability was discovered in Composable Stable Pools. While these pools were designed to provide stable liquidity by combining various stablecoins, they were found to contain security vulnerabilities.
Following the hack, Balancer claimed the incident was limited to V2 and that the overall structure of the core contract was unaffected. However, it served as a significant warning to the entire DeFi industry. In particular, it sparked controversy over the lack of complete assurance in smart contract audits and the potential for hard forks to deliberately alter the blockchain's "immutability principle."
Community-Driven Recovery, with DAO Funds to be Transferred Soon
The recovered funds will be transferred to a community-run DAO (Decentralized Autonomous Organization) wallet, and specific processes for reporting and distributing damages will be established. Discussions regarding victim compensation procedures, compensation mechanisms for contributors, and governance methods are still actively ongoing.
This incident is seen as more than a simple hacking response; it demonstrates how blockchain networks can change rules and implement post-event responses based on the will of the community. However, there are also critical views that hard forks could conflict with DeFi's core values of immutability and censorship resistance.
๐ Market Interpretation
Gnosis's hard fork is significant in that it goes beyond traditional responses to DeFi hacks and provides a chain-level post-event response through community consensus. As recovered funds move to the DAO, compensation procedures for victims are expected to begin in earnest, potentially serving as a precedent for similar incidents.
๐ก Strategy Points
- Utilizing the DAO structure to ensure community-led recovery in the event of hacking damage.
Smart contract security audits are mandatory, but not absolute.
- Rapid consensus between validators is crucial for chain-level response.
๐ Glossary
Hard Fork: A blockchain network forks by changing the current rules. The new version is incompatible with the existing version.
- DAO (Decentralized Autonomous Organization): An organization run by the community without a central administrator.
Composable Stable Pool: Balancer's V2 feature that optimizes liquidity provision by combining various stablecoins.
๐ก Want to know more? AI-prepared questions for you:
A. Balancer is a decentralized exchange that automatically trades and manages assets on the blockchain. On November 3rd, hackers exploited a vulnerability in the platform's smart contracts to steal $116 million worth of digital assets.
A. Gnosis Chain performed a hard fork on Monday to recover some of the assets stolen in the Balancer hack that the hackers were unable to access.
A. This method involves directly recovering funds that the hacker was unable to transfer through a chain update. The funds are then transferred to the DAO wallet, where the community discusses how to distribute them.
A. DeFi's core principles are immutability and decentralization. Because hard forks represent an exception to these principles, debates about restoring trust and governance continue.
A. Gnosis stated that they will transfer the recovered funds to the DAO wallet before Christmas. Once the compensation process is established, users will be able to claim their funds.
TP AI Precautions
This article was summarized using a TokenPost.ai-based language model. Key points in the text may be omitted or inaccurate.
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