The Ethereum Layer 2 project Kinto has announced its closure following a hack that resulted in significant financial losses. Project leader Ramón Recuero has stated commitments to reimburse affected users.
Timeline of Kinto's Downfall
On July 10, a hack exploited a vulnerability in Kinto's smart contract. The attacker minted 110,000 counterfeit tokens and siphoned approximately $1.55 million from lending pools on Morpho and Uniswap v4. Following the attack, the value of Kinto's token plummeted by 95%. The vulnerability had been flagged by security researchers, but Kinto failed to address it in time, leading to a loss of trust among users.
Measures to Protect Users
As part of the shutdown, all remaining assets will be directed to the Phoenix lenders, who are expected to recover 76% of their principal. Ramón Recuero has committed $55,000 of his personal funds to cover outstanding debts on Morpho, compensating victims up to $1,100 per address. Recuero highlighted the importance of transparency during this difficult time, stating, 'We’re shutting down cleanly and out in the open.'
Lessons to Be Learned
Kinto's fall serves as a reminder that even compliance-driven crypto ventures are not immune to the risks of DeFi exploits. Survival hinges not only on risk awareness but also on investor trust. Kinto's experience shows how crucial timely responses and a reliable team are to a project’s fate.
The closure of Kinto highlights the associated risks within decentralized finance. The lessons from this case may help other projects avoid a similar fate in the future.
