WazirX Update: Indian Exchange to Lock 45% Assets In Recovery Plan

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As an experienced financial analyst, I have seen my fair share of crypto exchange hacks and the resulting user compensation plans. The way WazirX has approached the situation is commendable, in my opinion. Their “fair and transparent” socialized loss strategy is a unique solution that provides immediate access to funds for users while also preserving the stability of the exchange.

Indian cryptocurrency exchange WazirX, which suffered a major hack earlier this month, has announced a user compensation plan. They’re implementing a “fair and transparent” socialized loss strategy, meaning that the losses will be shared among all users. This way, the impact of the hack is distributed equally among all users.

WazirX User Compensation Plan

The crypto exchange, after being hacked, has proposed an innovative 55-45 method for facilitating swift and adaptable fund recuperation. According to this plan, WazirX would grant users immediate access to nearly 55% of their assets, with the potential for additional recovery progressing for those who opt to wait.

Nischal Shetty, the founder of WazirX, presented two alternatives for managing leftover cryptocurrencies on the platform.

  1. 55% of the crypto assets would be available to users for trading or withdrawals.
  2. The rest 45% will be converted to a USDT-equivalent token and locked.

WazirX will manage the 55% portion of your unlocked funds by combining various crypto assets from other options on the platform. If more than half of this segment consists of tokens that have been impacted, WazirX will evenly distribute and swap out the affected tokens for a selection of healthy crypto assets available within the platform. According to their blog post, WazirX stated:

Through sharing the burden of loss among our user community, we maintain a level playing field and uphold the marketplace’s equilibrium. This methodology strikes a balance between granting swift access to certain users and providing an opportunity for potential recovery to others, ultimately leading to a more efficient resolution compared to conventional methods.

Recovery Efforts Continue

Nischal Shetty announced that the exchange’s initiatives for restoration are underway, collaborating with external allies for support. Additionally, they are exploring alternative strategies such as airdrops and novel applications for their tokens.

“The process of recovering such a substantial amount will take more time. By following the example of other exchanges that have faced similar setbacks and facilitating communication about the loss, we can bring the platform back online for users sooner.”

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2024-07-27 10:19