1inch DAO Considers $768,000 USDC Compensation Plan for October 2024 Exploit Victims

The 1inch Foundation has introduced a major compensation proposal to refund users hit by a 2024 exploit, moving to pay over $768,000 in USDC from its DAO treasury. The plan—which would require thorough KYC and law enforcement reporting—faces a close, high-stakes governance vote split by whales with opposing views.

1inch Targets Restitution for October 2024 Exploit Losses

In a significant move for the decentralized finance (DeFi) ecosystem, the 1inch Foundation has proposed reimbursing nearly $768,026 in USDC to users impacted by an exploit that struck its DEX aggregator protocol in October 2024. Outlined in proposal 1IP-80, the plan would see the 1inch DAO transfer over three-quarters of a million dollars from its treasury to compensate victims—a rare event in the typically non-custodial DeFi world. The exploit, traced to a vulnerability in the Lottie Player library used for web animations, allowed attackers to compromise the protocol on October 30, 2024. Unlike a more recent incident in March 2025 where most funds were returned after negotiations, the victims of this earlier breach have yet to see restitution.

Strict Claim Process for Eligible Victims

The Foundation’s proposed reimbursement comes with stringent conditions. To qualify for compensation, victims must complete identity verification (KYC), submit evidence of their losses, file an official police report, and sign a legal agreement to receive funds. Although specific KYC requirements are still unclear, these measures mark a sharp departure from 1inch’s traditional no-KYC user experience—a key draw for privacy-conscious DeFi users. Furthermore, claimants would need to waive all rights to potential future asset recoveries; any funds recouped would instead revert to the DAO’s treasury. The proposal also references an active investigation in the Canary Islands, indicating law enforcement involvement in the aftermath of the attack.

Key Stats & Figures

• USDC for Reimbursement: $768,026 to be distributed to October 2024 exploit victims
• Voting Breakdown: 3.8 million votes (53.47%) in favor, 3.3 million votes (46.53%) against as of publication
• Major Voter Influence: One wallet holds all 3.3 million ‘no’ votes; another wallet controls 2.2 million ‘yes’ votes
• Deadline: Voting on proposal 1IP-80 remains open until June 22

Governance Vote Divides DAO Community

Debate around the proposal underscores broader questions about DAO responsibilities in DeFi. While one major dissenting wallet argues that the DAO should not serve as an insurance fund—citing the absence of steady income—proponents say compensating users is vital for trust and community confidence. The close vote is currently being shaped by two large voting wallets on either side of the argument, highlighting concerns over concentrated governance and the balance between user protection and protocol sustainability.

Conclusion: What This Means for the Market

If passed, 1inch’s proposal could set a new precedent for user compensation and incident response in decentralized protocols—potentially influencing governance practices for DAOs across DeFi. However, the outcome remains uncertain as voting continues through June 22, with the final results likely to impact how DeFi projects address future security breaches and community restitution demands.

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