Dear Abracadabra Community,

First and foremost, we are proud to announce that following the recent exploit, our immediate actions have effectively mitigated the issue.

The DAO treasury, with its robust $15M in assets, is prepared to fully collateralise the exploited amount.

This decisive step ensures that our protocol operations will continue to run smoothly and safely, maintaining the trust and security our users expect!

Exploit and Mitigation

Yesterday we faced a $6.5M MIM exploit due to a vulnerability in certain older Cauldron V4 codes. Thankfully, this code is not in any of our latest products. We’ve swiftly mitigated the issue by setting borrow limits to zero for affected cauldrons, reinforcing the safety and security of our protocol. Rest assured, user collateral was never at risk.

A comprehensive post mortem is forthcoming.

Engagement with the Attacker

We have reached out to the attacker, offering a chance to rectify the situation and receive a substantial bug bounty. We have the full might of Chainalysis behind us, the largest and most experienced blockchain data and analysis company in the world.

Thanks to our Crypto Incident Response partnership, their team swiftly notified us of the attack and started tracking the funds immediately. Chainalysis is tapping into their extended network of exchanges and partners as well as successfully tracking and freezing the stolen funds.

Chainalysis is also offering support to the DAO to engage with Law Enforcement Agencies.

Despite this progress and in the interest of resolving this as quickly as possible, we are willing to work with the hacker directly and provide a fair bug bounty reward in exchange for the hacked funds. We will wait until Monday 5th of February, 16:00 CET to receive any communication from the hacker and begin negotiations.

After that, we will assume that the hacker is not willing to negotiate and reluctantly start formal criminal proceedings.

You can contact us directly on chain by writing to the address we have used to contact you, or directly at reward@abracadabra.money.

A DAO proposal will soon be posted, to address the situation and create a “Depeg Contingency Fund” to be used in extreme situations like this. More information on this is coming in the upcoming days, we appreciate your patience.

Products

As mentioned above, our full suite of products are ready to be used and move forward at full speed.

The Arbitrum gmCauldrons were completely unaffected by the attack, and their borrow limits have been set to 0 just for extreme precaution. **We are now ready to re-open those markets and allow people to leverage up on their favorite gmTokens.
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*A proposal to add gmBNB as collateral has been live on our forum for some time now, and can be found here.
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We are also happy to announce that behind the scenes over the last month, work has already started to create a new suite of products targeted specifically for our Blast and Berachain expansion.

In parallel, discussion has been started with several other L2s and L1s, you will be able to read all about it in their relative Forum Votes. The BD landscape for Abracadabra has never been more alive, fuelled by the successes of our Arbitrum STIP!

Liquidity Providers

We understand the stress that our liquidity providers have experienced over the last 24 hours. We cannot tell you how valuable your support is right now, and we are happy to communicate to you that the protocol is moving ahead at full speed.

STIP and SPELL emissions will not have further changes while we navigate past this situation.

Arbitrum LPers will still be able to enjoy the current rewards deposits per week, despite the reduction in TVL. Right now the MIM2crv pool on Arbitrum is currently paying above 58% APY in ARB rewards, and is ready to accept new USDT and USDC deposits.

70k ARB tokens per week will be distributed during this and the upcoming week, making the APY extremely stable.

Similarly, our MIM-crvUSD emissions will not change in the short term, currently sitting above the 70% mark.

Make sure to educate yourself on how to join the pool here.

Our engineers are running scripts and monitoring the blockchain for all the addresses that have been involved in LPing MIM over the last week, and a DAO proposal will be created to assess the situation and decide how to move forward with them.

$MIM Savings Rate

Additionally, we would like to announce that our initial version of the $MIM Savings Rate contracts are going through audits and were originally planned to launch in the next 10 days.

We will keep you updated on when this new innovative system will go live. We are confident that it will completely revolutionize the way we see $MIM LPing.

One Last Thing…

Lastly, we would like to announce that a product targeted specifically for LPers has been under construction for several weeks now, and is starting to shape up.

There is not much we can share about that, other than the fact that our DAO contributor’s multi-year expertise in managing LPs rewards and LPers is gonna be used at length.You will be able to see the first iteration of this product for our Blast launch, stay tuned!

Depeg Contingency Fund

We are going to be using this situation to enhance our DAO defenses to bad illicit actors.

In the next few days a community proposal will be posted to institute a Depeg Contingency Fund (DCF).

The DCF will be governed by the DAO following AIP proposals, and will be secured by the DAO Multisigners.

The main scope of the DCF is to step in whenever a dire situation arises that creates stress on the peg of MIM, acquiring MIM from the market and using it either to stake it in the MIM savings rate, to increase DAO revenue while taking MIM out of the circulation, or simply to hold it securely.Our Contributors are already working on a proposal to be added to the forum for community feedback, and then voted on by SPELL holders.

The DCF will be more and more involved in our DAO operation, and allow for better MIM and LPing stability.

Conclusion

Lastly, we would like to thank all of the protocols, users and friends that have reached out while we were planning the move forward from this unfortunate event.

Your support meant the world, and we cannot wait to move Abracadabra forward with you all.

The road ahead is bright and clear, and we are looking forward to walking it beside all of you!