The Major Hacking Event on Sui Ecosystem
On May 22, a major hacking event shook the Sui ecosystem when Cetus, a decentralized trading platform, lost around $223 million. This breach created chaos among users and sparked a significant withdrawal of funds across the network. The total locked value (TVL) on Sui plummeted from nearly $2.1 billion to approximately $1.57 billion, indicating a decline of over 25%.
Emergency Actions and Recovery Strategy
In reaction to these events, Cetus took rapid emergency actions, collaborating with numerous Sui verification nodes to freeze the primary wallets utilized by the hacker for fund transfers. The Cetus team wasted no time in partnering with the Sui security squad and various auditing firms to conduct an extensive audit of their smart contracts and formulate a user asset recovery strategy.
To facilitate this, Cetus allocated $7 million from its own reserves and secured an additional $30 million USDC loan from the Sui Foundation for the purpose of compensating impacted users. On June 8, operations were resumed, allowing all functionalities, including trading and liquidity management, to reopen. Remarkably, the liquidity of affected pools rebounded to between 85% and 99%. Furthermore, Cetus has pledged to compensate users by allocating 15% of the protocol’s total tokens, where 5% is immediately accessible and 10% will be gradually unlocked over the next year.
Marketplace Recovery and Investment Attraction
Despite these disruptions, early signs suggest that the Sui ecosystem is on the mend. On-chain data indicates a recovery in TVL to $1.92 billion, nearing pre-incident levels, which not only reflects a restoration of user confidence but also signals that a number of protocols are attracting fresh investments.
Standout Protocols in Recovery Phase
Among the standout protocols during this recovery phase are Momentum, Turbos, Bluefin, and Kai.
Momentum
Momentum, the first decentralized exchange featuring a native ve(3, 3) mechanism on Sui, has garnered attention for its rapid growth. Utilizing its governance token veMO and enticing incentives, it encourages users to lock assets for transaction fee sharing and protocol rewards. Having launched in March, Momentum’s TVL has surpassed $89 million, achieving record highs, while its transaction volume has exceeded $3.6 billion, with over 420,000 engaged users. Recently, Momentum secured strategic funding led by OKX Ventures and Coinbase Ventures, boosting its expansion capabilities.
Turbos
Turbos, which launched concurrently with the Sui mainnet, prides itself on its modular architecture designed to mitigate systemic risks. During the Cetus incident, Turbos’ contracts remained unscathed, yielding a flawless performance without transaction disruptions throughout the turmoil. This resilience has allowed Turbos to attract capital as the market stabilizes, with many users shifting liquidity to the platform, recognizing its robust technical framework. Turbos has also unveiled a variety of liquidity incentive pools to further invigorate user participation.
Bluefin
Bluefin is carving its niche in decentralized derivatives trading, offering products such as perpetual contracts. With a transparent on-chain mechanism, Bluefin maintains solid trading activity and an expanding user base, fulfilling a critical role in Sui’s derivatives market.
Kai Protocol
Lastly, Kai Protocol specializes in automated asset management, providing users with strategic portfolio management solutions. This user-friendly approach serves those desiring consistent returns with minimal engagement. As Kai continues to develop its offerings, it is increasingly appealing to conservative investors, reflected in its steady growth.
Conclusion
In summation, while the breach at Cetus posed a significant challenge to the Sui ecosystem, it concurrently proved its resilience. The burgeoning growth of Momentum, Turbos, Bluefin, and Kai not only aids TVL recovery but also underscores the ecosystem’s strength in its operational frameworks and security protocols. With user confidence gradually rebounding, Sui is poised to move beyond the implications of this incident and embrace a more stable future.
