Cetus Protocol, a decentralized exchange native to the Sui blockchain, is making a comeback after suffering a devastating $220 million exploit in May. In a bid to rebuild trust and enhance security, the team has announced plans to transition to an open-source model. They will also replenish affected liquidity pools and implement a compensation plan for users.
Restoring Liquidity Pools After the Attack
On May 22, an attacker exploited a pricing mechanism flaw in Cetus Protocol, draining tokens from its major liquidity pools. The protocol acted swiftly, freezing $162 million of the stolen funds on the Sui blockchain shortly after the attack. Despite this setback, Cetus managed to restore operations. They did so by replenishing affected pools using a combination of recovered funds, cash reserves, and external support.
Trade volume on Cetus had been trending upward before the attack, registering over $5 billion in April and another $5 billion in May, despite shutting down afterward.
In a June 7 Medium post, the team outlined how they restored liquidity:
- $7 million from internal cash reserves.
- A $30 million USDC loan from the Sui Foundation.
- Recovered assets seized from the attacker.
However, not all pools were fully restored. Recovery rates vary between 85% and 99%, depending on the extent of the drain during the exploit.
Moving Toward Open-Source and Enhanced Security
As part of its relaunch, Cetus Protocol is taking significant steps to improve transparency and security. The team announced plans to go fully open-source, enabling the community to contribute to the protocol’s development and security.
To further encourage collaboration, Cetus introduced a new white bounty program. This program invites developers and security experts to audit the code and identify vulnerabilities. This move aligns with the protocol’s commitment to fostering collective contributions and ensuring robust protection against future exploits.
The team also patched the software vulnerability that enabled the hack. Moreover, they restored pool data to accurate pricing levels and conducted multiple security audits on all code fixes and contract upgrades.
Compensation Plan for Affected Users
To address the losses incurred by users during the exploit, Cetus Protocol has set aside 15% of its native token supply (CETUS) as part of a compensation plan. The distribution will occur in two phases:
- 5% of the tokens will be made available immediately.
- The remaining 10% will be unlocked linearly over the next year, starting from June 10.
Despite these efforts, the Cetus token (CETUS) has faced downward pressure. It dropped over 11.86% in the last 24 hours to trade at $0.1145, according to CoinMarketCap.
Pursuing Legal Action and Recovering Remaining Funds
While significant progress has been made, Cetus Protocol is not done pursuing the attacker. Legal proceedings have been initiated in multiple jurisdictions, with law enforcement agencies actively involved in the investigation.
“The attacker ignored our previous white hat offer and has begun attempting to launder assets — a futile and traceable act. We are highly confident that successful arrest and recovering the remaining assets is only a matter of time,” the team stated.
Shortly after the hack, Cetus offered a white hat bounty of up to $6 million if the exploiter returned the stolen 20,920 Ether (worth over $55 million) along with the frozen funds. However, the attacker has yet to comply.
Upgrading Monitoring Systems and Conducting Audits
To prevent similar incidents in the future, Cetus Protocol is upgrading its monitoring systems and conducting additional rounds of security audits. These measures aim to strengthen the platform’s resilience against potential threats. They also aim to ensure a safer environment for users.
Final Thoughts
The relaunch of Cetus Protocol marks a pivotal moment in its recovery journey following the $220 million exploit. By moving toward an open-source model, introducing a compensation plan, and enhancing security measures, the team is making meaningful steps to regain user trust. They are also working to position themselves as a leader in the Sui ecosystem.
While challenges remain—such as recovering the remaining stolen funds and stabilizing the CETUS token —the protocol’s proactive approach demonstrates its commitment to long-term growth and innovation.
As the crypto industry continues to grapple with security concerns, Cetus Protocol’s response serves as a case study. It highlights resilience and adaptability.
