Earlier this week, we saw one of the most devastating DeFi (decentralised finance) hacks on record with an estimated US$326 million stolen from blockchain bridge, Wormhole. In a remarkable turn of events, Chicago-based venture capital fund, Jump Capital, came to the rescue to the tune of 120,000 ETH:
A Hack with a Happy Ending
DeFi exploits and hacks don’t typically end well, as was the case with December’s MonoX Finance saga, in which US$31 million was stolen. However, in the case of Wormhole, things seemed to have turned out okay.
While the team is yet to have provided a detailed report, something expected in these types of situations, Wormhole has indicated that the vulnerability has been fixed:
While the Wormhole network went down for maintenance during the investigation, the team has now confirmed it is back up and running and that all funds have been replenished:
Responses from the community were mixed, to say the least. Some were incredibly appreciative:
Others were less so, pointing to the lack of transparency:
Wormhole initially offered a US$10 million bounty to the hacker, however the current status of the negotiations remains unclear.
DeFi With a Backstop … Contradiction in Terms?
It’s not surprising that the community is somewhat divided on Jump Capital stepping in because … wasn’t the whole purpose of DeFi to disintermediate rent-seeking middlemen and “decentralise” power away from banks and financial institutions? Isn’t DeFi supposed to be a free market, absent of manipulation, bailouts, subsidies, and zombie companies that characterise the modern financial system?
Admittedly if you happened to be a beneficiary of Jump Capital’s bailout, you’d be excited by the prospect of deep-pocketed venture capitalists coming to save the day.
Despite bailouts being inherently incongruent with DeFi principles, the more interesting question, is who would spend 120,000 ETH without some serious skin in the game? Clearly, someone who stands to gain far more by throwing in another US$331 million (120,000 ETH).
Perhaps Jack Dorsey was on to something when he said that Web 3.0 was a venture capitalist’s playground.
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