1inch DAO Weighs $768K USDC Reimbursement for Victims of 2024 Exploit

The 1inch Foundation is seeking community approval to compensate users impacted by a major exploit in October 2024, with a proposed payout of over $768,000 USDC. The plan—currently up for DAO vote—aims to provide restitution to victims but has sparked debate within the ecosystem over its broader implications for decentralized governance and user protection.

Compensation Proposal Targets October 2024 Exploit Losses

The 1inch Foundation has put forward Proposal 1IP-80, designed to reimburse users who suffered losses during the exploit on October 30, 2024. Attackers exploited a supply chain vulnerability in the Lottie Player animation library, leading to the theft of various tokens valued at roughly $768,026 at the time. The proposal earmarks USDC from the DAO treasury, highlighting the community-driven nature of the remedy process after failed attempts to recover funds through other avenues.

Verification and Claims: KYC and Legal Hurdles for Reimbursement

To qualify for compensation, affected users must undergo a multilayered verification process overseen by the 1inch Foundation. This includes Know Your Customer (KYC) identity checks, providing irrefutable proof of losses, submitting a police report, and signing a legal claim agreement. Notably, specific KYC details remain unspecified—a notable shift in policy for a protocol that traditionally forgoes KYC, drawing privacy-minded traders. Furthermore, as part of an ongoing criminal investigation in the Canary Islands, victims must relinquish rights to any assets that might be recovered through law enforcement, committing those funds back to the DAO instead.

Key Stats & Figures

• Total Proposed Compensation: $768,026 in USDC, reflecting the estimated losses at the time of the breach
• DAO Vote as of Publication: 53.47% in favor (3.8 million votes) vs. 46.53% against (3.3 million votes)
• Voting Deadline: June 22, 2024, with votes dominated by two significant wallets controlling the major stakes
• Victim Requirements: KYC completion, police report, loss evidence, legal waiver on future asset recovery

DAO Divided: Is Treasury Compensation Sustainable?

While the plan has found majority support so far, debate is intense within the 1inch community. The largest ‘no’ voting wallet—casting 3.3 million votes—argues that the DAO should not be used as an insurance pool, warning that such disbursements are unsustainable without consistent revenue. On the other hand, those in favor, led by another dominant wallet accounting for 2.2 million of the ‘yes’ votes, emphasize the importance of upholding user trust amid incidents that threaten protocol integrity. The split reveals broader questions about the role of DAOs in addressing user losses—especially when protocol-level insurance and revenue streams remain undefined.

Conclusion: What This Means for the Market

The outcome of the 1inch DAO vote will serve as a key precedent for how decentralized platforms navigate the tension between community compensation and treasury stewardship. If approved, the payout could reinforce user faith but prompt future debates over treasury management and security responsibility. As voting continues until June 22, the entire DeFi sector will be watching closely for cues on evolving governance norms.