Kinto ethereum Layer-2 Project Ceases Operations After Major Exploit
Kinto, an Ethereum Layer-2 project, will shut down this month following a notable exploit. In July, hackers drained around 577 ETH, equivalent to $1.9 million, leaving the project’s reserves depleted.
The team appeared on X and announced the closure on September 30th. Since the hack, the K token has plummeted by over 80%, reflecting the crisis’s impact.
This vulnerability exploited an issue within the ERC-1967 Proxy standard, frequently enough used for upgradeable smart contracts. Attackers minted over 100,000 fake Kinto tokens and used them to drain liquidity from Uniswap and Morpho lending platforms.
Even though Kinto attempted recovery via the Phoenix Program,raising $1 million in debt to resume operations,lingering debts and declining market conditions proved insurmountable. Fundraising efforts faltered, and the team hasn’t been compensated since July.
- Kinto has pooled about $800,000 of residual assets.
- Phoenix creditors may reclaim approximately 76% of their investment.
- Hack victims, especially those with Morpho, can expect individual grants of up to $1,100 funded by Kinto’s founder.
User withdrawals remain available until the 30th. following that, Ethereum’s mainnet will host a claim contract in October to restore user balances. An ERA airdrop remains scheduled for october 15th.
Kinto’s downfall underscores layered-2 and defi vulnerabilities, especially in projects employing mutable smart contracts.It galvanizes demands for enhanced security protocols and robust treasury protection mechanisms in the decentralized finance space.
