In response to the damaging hack that occurred earlier in August, Cypher, a decentralized exchange on the Solana blockchain, is staging an advance in its token sale strategy. Originally, the Initial Decentralized Offering (IDO) was set for the end of September, but the attack left Cypher with the necessity to rebuild its treasury, accelerating its plans. The protocol suffered a substantial loss of over $1 million in assets, a hard blow particularly since it had been showing promising signs of growth.
Effectively, the pending sale is a gambit to recoup some of the losses and provide compensation of sorts to depositors who were hit in the adverse event. An interesting part of the plan is the issuance of a debt token to those affected investors. This move suggests that as Cypher’s protocol grows, these depositors can recover their financial losses. The success of this strategy will largely depend on whether Cypher can regain the impressive momentum it exhibited in the weeks preceding the hack.
Yet, this new strategy may be a pivotal moment for the Solana ecosystem as well. There hasn’t been a significant new IDO in the Solana blockchain recently. Thus, the response to Cypher’s token issuance may reveal investors’ current attitude towards new token issuances within the Solana environment.
The tokenomics of this upcoming sale present an unusual distribution where more than 45% of the tokens are allocated for public investors. A percentage is set aside for the team, investors, advisors, and growth incentive programs. Additionally, a further 7.3% will be used for token airdrops, albeit details on its management are yet available. Despite the uncertainty, it is announced that 50 million tokens will be distributed to depositors who suffered losses resulting from the hack.
Effectively, Cypher aims to issue refunds to the affected depositors at a rate of 31 cents on the dollar, utilizing the funds that were luckily spared from the hack. Moreover, Cypher is still in pursuit of the stolen funds and, interestingly, managed to freeze a portion worth $600,000 in centralized crypto exchanges. However, the retrieval of these funds is contingent on the cooperation of those centralized exchanges and the issuance of seizure warrants by legal enforcement.
This episode, while unfortunate, becomes a real-time test case of resilience and strategy, both for Cypher and for the larger crypto ecosystem in navigating the thorny issues that cyberattacks present.
Source: Coindesk
