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- Nemo Protocol offers debt tokens to compensate 2.6M exploit victims.
- NEOM tokens provide hope for recovery but liquidity remains uncertain.
- Nemo’s bold recovery plan involves new debt tokens and transparency.
Nemo Protocol, a yield-trading platform built on the Sui blockchain, is offering a daring solution to compensate users impacted by a recent $2.6 million exploit. Rather than standard stablecoin payouts, the platform will provide the new form of debt token to the affected users in the form of NEOM. These tokens will be appreciated depending on the losses of each user, on a snapshot when the system was stopped temporarily after the attack.
On September 7, blockchain security company PeckShield discovered the exploit in which the Nemo market pool had been emptied of $2.6 million. A post-mortem analysis of Nemo determined that the vulnerabilities of the code (inserted by one of the developers and not properly audited), enabled the hacker to gain control of the platform. After the breach occurred, Nemo was able to decide to close its system and use a recovery plan.
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Debt Tokens: A New Way to Recover Losses
The recovery plan of Nemo occurs at three levels. To begin with, the user base will be given a chance to transfer the rest of their assets to new and safe contracts, and then they will be granted NEOM tokens depending on their lost assets. The NEOM tokens may be sold immediately in an automated market maker pool or saved, hoping to be recovered later.
To facilitate the liquidity difficulties, Nemo will set a pool between NEOM and USDC on a well-known Sui-based exchange. Also, all the assets recovered by the hacker will be deposited in a redemption pool of multi-party, in such a way that NEOM holders are recompensated in the same way. The protocol will as well embark on external financing, by way of loans or strategic investment, to facilitate the redemption process.
Transparency would also be important to Nemo because they are going to launch a public dashboard, where NEOM tokens are burned and redeemed in real-time. However, the ultimate price of NEOM tokens will be unknown, and it depends on the outcome of the recovery operations and external support in spite of the promises provided by the team. Such a radical move has led to numerous debates among the crypto community on whether the debt tokens will bring some real restoration or just an extra blow of uncertainty.
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