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DeFi Project Rari Capital Hacked!

Rari Capital has been hacked for $11M! 60% of the Rari Capital user funds have been emptied in the weekend.

Last Saturday, Rari Capital announced that around $11M ETH was stolen from them. The amount showed “60% of all users’ funds.”

Rari plans to set aside 2 million RGT to compensate the users who lost the money during the attack.

Rari Capital is a crypto fund under DeFi. It is a non-custodial fund – it runs on code that handles money for the user, in contrast with a banker or investment manager. If one entrusted Rari with crypto, the algorithms will juice the gains.

Rari Capital’s Action

The RGT token works a bit like a voting share in a traditional company. It also spawned a secondary market: after the attack last Saturday, the price of RGT dropped by 50%.

In today’s prices, the planned 2 million RGT donation comes in at $24 million – it is enough to cover the $11 million stolen from Rari’s users.

defi project hacked

Rari CEO Jai Bhavnani stated that Rari team members will be sacrificing their RGT allocations and putting them to the reimbursement. For now, the tokens will be sent back to the project’s treasury. Rari users and token holders will vote on whether to approve the reimbursement and how it will be dispersed.

DeFi protocols are risky investments. A common type of crypto fraud scheme in 2020 is the DeFi “rug pulls,” it is a type of an exit scam.

The DeFi enthusiasts like that it doesn’t include banks in the scene. However, one of the nice things about banks is that they keep money safe. When a DeFi protocol code is exploited, it is on majority token-holder to agree if the victims will be reimbursed.

What really Happened to Rari Capital?

The hackers were able to extract ETH from Rari by creating the code in Alpha Finance, an affiliated DeFi Protocol. Rari says that the code was audited before by a blockchain security company named Quantstamp, but says that “they were not aware” of the abuse.

“Countless protocols get hacked each year and it is a matter of how the community and the protocol that determines the future of the project.”

Jai Bhavnani, Rari CEO

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