Flamingo Finance announces Asset Support Initiative in wake of third Poly Network hack

Flamingo Finance is tentatively planning an Asset Support Initiative to reduce the negative impact that platform users faced due to the most recent Poly Network hack. The initiative has been designed to compensate users for 50% of the losses they’ve incurred as a result of the de-pegging of f- and p-assets from their underlying tokens.

Despite the fact that the exploit stems from a vulnerability in Poly Network’s infrastructure, Flamingo has provided the most detailed communication regarding the event with concern to its users.

The attack on Poly Network’s CMCC

On Aug. 12, Poly Network temporarily suspended its cross-chain bridging services for Neo N3 in response to an exploit targeting the Poly Network Cross-Chain Management Contract.

In Flamingo’s recent article, the team noted that the hacker was able to exploit Poly Network’s CMCC for around US $4 – $5 million. The hacker absconded with approximately 20% – 25% of all Poly Network cross-chain assets, including fUSDT, fWBTC, fWETH, fBNB, fCAKE, pWING, and pONT. As a result, all unwrapped versions are now worth about 75% – 80% of their wrapped f- and p-asset versions (i.e., 1 fUSDT = .75 to .8 USDT).

Despite a bounty offered via signed message on the Ethereum network, the hacker hasn’t returned the stolen funds, and has yet to respond to Neo Global Development or Poly Network. Assuming the worst-case scenario that the hacker will not return any funds, the Flamingo team has devised the Asset Support Initiative to try and “soften the blow” of the losses to f- and p-asset holders.

Flamingo’s Asset Support Initiative

The initiative is currently designed to offer affected users compensation of up to 40 million FLOCKS, which will be distributed over a two-year timeframe once the users actualize their losses.

FLOCKS is the next evolution of FLUND, initially created to fulfill a demand for single-sided staking on Flamingo. Once live, FLOCKS holders will earn fees from the platform as a form of dividends. The FLOCKS protocol will also integrate governance weighting for users to vote on platform activities, such as adding liquidity pools.

When the Poly Network bridge is live again, Flamingo plans to launch an Asset Actions page where users can migrate their current f- and p-assets to a new cross-chain asset standard. The 20% – 25% loss from the de-pegging will be actualized upon migrating the affected assets to the new cross-chain standard.

Two things will occur upon the migration of the f- and p-assets to the new standard. First, the ratio of wrapped to un-wrapped assets will return to 1:1 (i.e., 1 fUSDT will equal 1 USDT). Second, the FLOCKS distribution will begin at a monthly cadence and take place over the next two years.

For example, assuming the max 25% de-pegging, if a user migrates their current holding of 1,000 fUSDT to the new cross-chain asset standard, they’ll receive 750 fUSDT and actualize the 250 USDT loss. Flamingo will compensate half the user’s loss and offer $125 worth of FLOCKS, which will be evenly distributed over the following two years (i.e., approximately $5.21 worth of FLOCKS each month for 24 months).

The amount of FLOCKS the user receives will be determined by the asset’s price at the moment of the migration, regardless of any future price changes in the underlying asset.

If the stolen funds are recovered at any point, Flamingo will stop the FLOCKS payments and distribute the recovered assets to affected users. In cases where partial recovery occurs, the remaining compensation may involve burning excess FLOCKS tokens to maintain fairness.

No plans have been finalized as of press time and are subject to change as further investigations and negotiations unfold. Flamingo urges users to follow the project’s social media accounts for any future updates.

The full announcement can be found at the link below:
https://medium.com/flamingo-finance/poly-network-bridge-exploit-and-the-asset-support-initiative-c80c636255bb

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