Ethereum’s Kinto Layer-2 Faces Shutdown Amidst July Exploit
Kinto, an Ethereum Layer-2 solution, announced its shutdown by September 30th due to an exploit that occurred in July. The project lost approximately 577 ETH ($1.9 million).
The news caused the project’s native token K to plummet by over 80%, reflecting the severe financial blow.
- Phoenix lenders are slated to recover roughly 76% of funds.
- Hack victims are eligible for $1,100 goodwill grants.
- Withdrawals remain available until Sept. 30.
The July exploit targeted Kinto,exploiting a flaw in the ERC-1967 Proxy standard commonly used in smart contracts. This lead to the creation of 110,000 fake kinto tokens, which attackers then used to siphon funds from Uniswap and Morpho.
Kinto managed to raise some relief debt but was unable to sustain operations due to debts, poor market conditions, and waning investor trust. Consequently, fundraising was unsuccessful, leaving the team unpaid as July.
In its final steps, Kinto is working to compensate affected parties. Around $800,000 has been set aside in a foundation-managed safe. Victims of hacks via Morpho will receive support from a personal grant by its founder Ramon Recuero.
Kinto’s exit serves as a stark reminder of the vulnerabilities in Layer-2 solutions within the decentralized finance space. The team emphasized their commitment to responsible closure, aiming to repay stakeholders as much as possible.
