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- Gnosis activates emergency hard fork to unlock funds frozen after Balancer exploit
- Validator consensus enables recovery efforts following $116M Balancer hack on Gnosis
- DAO custody plan emerges as network moves to secure recovered assets
Gnosis Chain operators carried out a decisive hard fork after funds linked to a $116 million Balancer exploit became immobilized on the network. The intervention was preceded by weeks of coordination between the validators following the previous measures that did not entirely restore access to the compromised assets. As per a post posted on X, Gnosis claimed that the hard fork had taken the money that had been compromised out of the reach of the hacker.
The network said that the move was constructed upon an earlier soft fork embraced by the majority of the validators. The previous soft fork restricted additional harm by halting contracts being managed by Balancer on the Gnosis Chain. Nevertheless, engineers found it subsequently necessary to change the protocol even further to recover funds.
The hard fork, therefore, modified consensus rules so as to unlock assets that were stuck due to the exploit. Gnosis showed that the recovery could be partial or even complete, but did not verify a conclusive figure. Besides, the project emphasized that recovered assets would be transferred to a wallet controlled by the DAO to secure it.
The exploit itself shocked the decentralized finance world, draining over $116 million from Balancer pools. On-chain records indicated that the attacker was transferring huge sums of staked Ether worth $2,965 into new wallets. Those transfers later stalled, which provided the grounds for coordinated intervention on the network level.
Balancer disclosures show that before the hard fork, white hat hackers earned approximately $28 million independently. Nevertheless, most of the assets attacked were not accessible until Gnosis intensified its reaction.
Also Read: Whale’s Multisig Wallet Compromised, $40M Stolen and Laundered Over Weeks
Governance coordination drives recovery strategy.
Most user claims and contributor recognition debates are still ongoing in the community, as Gnosis’s head of infrastructure, Philippe Schommers, noted. He added that the priority would be first ensuring that money is safely placed and then considering the compensation and distribution systems. Furthermore, Schompers stressed that it was essential to rebuild trust in the users affected by the exploit.
Throughout the recovery, there was a key role that was played by validator coordination. Most of them backed the original soft fork, showing that they would pull together in case of an emergency. That consensus subsequently made it possible to implement the more complicated hard fork without fragmentation of the network. Moreover, Gnios was also transparent as they released notices and met the community freely.
The Balancer exploit also brought back controversy over innovative contract security practices. According to the records of the public audits, Balancer V2 was audited 11 times by four security companies. Despite such reviews, attackers used the vulnerabilities that were isolated to V2 Composable Stable Pools.
The incident, therefore, left vulnerability to the use of audits as the sole protocol safeguarding. The intervention of Gnosis Chain is now one of the few examples of fund recovery through governance. The relocation also exemplifies the tension that still exists between the principles of decentralization and emergency asset protection.
The recovery process is still on since it is awaiting stakeholders to get clarity regarding claims and final distributions. Market participants continue monitoring developments closely as the situation evolves across the ecosystem.
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