1inch DAO Debates $768K USDC Restitution for October 2024 Exploit Victims

The 1inch Foundation has put forward a major compensation proposal for victims of last October’s exploit, igniting a heated community debate over the DAO’s financial responsibility. A $768,026 USDC reimbursement plan—if passed—would mark the first organized effort to repay losses from the 2024 attack.

New Restitution Plan Emerges for Exploit Victims

In an effort to address unresolved damages from a devastating exploit last October, the 1inch Foundation has unveiled proposal 1IP-80 before its decentralized autonomous organization (DAO). The plan outlines compensating affected users with $768,026 in USDC, reflecting the value of tokens stolen during the breach. Funds would be allocated directly from the DAO’s treasury, a move that signals a significant commitment to user protection within the DeFi aggregator’s ecosystem.

Strict Verification and Waiver Requirements for Compensation

The Foundation’s proposal lays out an extensive claim process: eligible victims must complete Know Your Customer (KYC) identity checks, submit documented proof of losses, file police reports, and enter into a legal compensation agreement. Notably, even though the 1inch platform normally operates without KYC requirements—attracting privacy-focused traders—this proposed payout demands identity verification. Furthermore, affected users would need to waive any rights to future fund recoveries, agreeing that such repossessed assets revert to the DAO treasury. This is partially influenced by an ongoing case in the Canary Islands, which could impact assets seized down the road.

Key Stats & Figures

• Total Restitution Plan: $768,026 USDC proposed for reimbursement to exploit victims
• Voting Breakdown: 53.47% (3.8 million votes) in support vs 46.53% (3.3 million votes) against as of publication
• Voter Concentration: Two wallets dominate voting: one with 2.2 million ‘yes’ votes and another with 3.3 million ‘no’ votes
• Voting Deadline: Proposal voting closes on June 22, 2024

Controversy Over DAO’s Role and Voting Dynamics

The proposal has evenly split the 1inch DAO, igniting passionate arguments about whether the treasury should serve as a de facto insurance fund. Dissenters—clustered behind a single large wallet responsible for the entirety of the ‘no’ votes—contend that recurring revenues are insufficient to cover such compensation, raising concerns about sustainability if the DAO regularly absorbs user losses. Supporters, meanwhile, argue that proactive restitution can bolster user trust and platform reputation. Voting has also attracted scrutiny, as a handful of dominant wallets seem to steer the outcome, highlighting persistent challenges with governance decentralization.

Conclusion: What This Means for the Market

As the restitution vote approaches its June 22 deadline, the outcome will likely set a precedent for how DeFi communities address large-scale security breaches. A ‘yes’ decision could signal a shift toward greater user protection—but may challenge the fiscal limits of DAOs operating without steady revenue. The 1inch DAO’s approach will be watched closely by industry participants assessing the evolving responsibilities of decentralized governance in crypto’s high-stakes landscape.