Nemo Protocol Launches Debt Tokens After $2,6 Million Hack
- NEOM Token Compensation Program on the Nemo Protocol
- Exploration drained US$2,6 million of liquidity at Sui
- Redemption pool with recovered funds and new investments
Nemo Protocol, a yield trading platform built on the Sui blockchain, announced a compensation program for users affected by the attack that drained $2,6 million from its markets in early September. The solution involves the issuance of debt tokens called NEOM, equivalent to each participant's losses calculated in US dollars.
Em official publication , the protocol team explained the reason for choosing the debt model.
“While we would prefer to reimburse everyone directly in US dollars, we do not have sufficient funds or capital to do so, which is why we have adopted the debt token strategy as the most viable path forward,”
said Nemo.
The attack, detected on September 7th by on-chain security firm PeckShield, exploited code flaws introduced without proper auditing. As a result, the protocol was paused to prevent further damage, and an on-chain snapshot was taken to accurately calculate each user's losses.
The recovery plan will be implemented in three phases. The first phase will allow users to migrate their residual funds from compromised pools to new, audited, multi-party contracts. During this phase, holders will receive NEOM tokens equivalent to their losses.
Users will then be able to choose to liquidate their tokens into an initial liquidity pool that will be opened on a major decentralized exchange on the Sui network, pairing NEOM with USDC, or simply hold the tokens and wait for the future distribution of recovered values.
Furthermore, any funds eventually recovered from the attack will be directed to a multi-party redemption pool. This pool may also receive contributions from external liquidity loans or strategic investments, increasing the chances of full compensation for NEOM holders.
To reinforce community trust, the protocol announced that it will launch a dedicated website for real-time monitoring of NEOM token burns and compensation process updates.
In a post-incident analysis released last week, Nemo detailed that the stolen funds were transferred from the Sui blockchain to Ethereum via Wormhole CCTP. The team stated that it continues to work with security experts to track the assets and is negotiating a potential white-hat solution, in addition to offering rewards for information leading to their recovery.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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