THORChain Initiates Recovery Phase with Node Operator Vote

Following a recent security incident, the THORChain team has released its fourth comprehensive update. A pivotal governance proposal, ADR028, is now live and undergoing a voting process by node operators, marking a critical step in the protocol's restoration efforts.

Clear Loss Absorption Strategy Prioritizes Holder Protection

The outlined recovery plan details a structured approach to cover the incurred losses:

  • Primary Layer: Protocol-Owned Liquidity. The protocol will first utilize funds from its own treasury to absorb the bulk of the loss, which is expected to temporarily deplete this liquidity pool.
  • Secondary Layer: Synth Asset Holder Contribution. Any remaining shortfall will be shared among synthetic asset holders. The exact distribution ratio is under final assessment to ensure equity.

The plan firmly rules out issuing new RUNE tokens or conducting sell-offs to address the deficit, thereby protecting existing holders from dilution. Replenishment of the protocol's liquidity will rely solely on future system-generated revenue.

Technical Remediation and Enhanced Security Posture

On the technical front, necessary patches and upgrades to the affected components have been completed. Network trading will resume only after all vulnerabilities are confirmed fixed and a successful node churn is executed. THORChain has committed to adopting a more cautious and security-conscious release cadence moving forward.

The protocol will differentiate between nodes involved: innocent nodes operating in the same vault as the attacker will be shielded, while the attacker's node will be fully slashed. Recovered funds will be used to pair assets, with any surplus scheduled for burning.

Open Dialogue for Recovery and Commitment to Neutrality

The protocol has opened a communication channel, offering clear terms for the return of funds. Should a partial return occur, the recovery plan will be scaled back proportionally. THORChain reaffirmed its permissionless and neutral ethos, stating that no transactions will be censored once the network resumes operations.

The node operator vote is currently underway. Numerical values within the proposal are indicative, with final parameters to be adjusted via the decentralized governance mechanism.