Decentralized finance protocol Defrost Finance has recovered funds from the hacker involved in the V1 flash loan exploit.
In the latest blog post, Defrost said that it will soon start scanning the on-chain data to return the funds to their rightful owners. However, the platform said that it could take some time to distribute since different users had variable proportions of assets and debt, but assured that the process would be “concluded fairly swiftly.”
“Please be aware that the entire operation will be managed transparently using a new contract and that will allow the addresses of affected users to claim their fair share.”
The process involves converting all Ether into stablecoins, like Dai, at the on-chain market rate which will then be transferred from the Ethereum blockchain to Avalanche.
The team will then scan the on-chain data “to find out who owned what before the hack” following which details will be released.
Defrost also plans to deploy a smart contract to let users claim their assets back in stablecoins to the same addresses.
The platform said that it suffered its first attack using a flash loan wherein the perpetrator(s) drained funds out of its V2 product. A second larger attack used the owner key to exploit V1.
Initial loss was estimated to be around $12 million.
Blockchain investigator Peckshield speculated that it could be a potential case of rug pull.