Fei turns again, refunds victims of crypto hacks

After months of mixed signals, victims of the $80 million Fei Protocol hack have finally been made whole.

Fei’s repayment plan – rolled out this week – caps the chaotic past months. The protocol initially voted to refund victims of the hack, before changing course and only offering partial refunds. After backlash, Fei’s DAO finally voted to fully refund the victims.

The Olympus DAO, which lost $9 million in the hack in April, cast an overwhelming 93 million of the 99 million votes in favor. The vote was one of the last governance decisions Fei’s Tribe DAO will make before it is wound down.

Months before the hack of the Fuse lending protocol, Fei merged with the lending protocol Rari Capital. The partnership hinted at things to come in terms of Fei’s insider management.

“The road [the Fei-Rari merger] was structured was pretty brutal for anyone who wasn’t a majority controlling shareholder, said DeFi researcher Luca Prosperi.

After the newly merged Fei was hacked in April, Tribe DAO adopted a Snapshot vote to make hack victims whole. Fei then held a contentious second vote that was against a full refund and said it would liquidate Tribe.

Fei then proposed a plan that would recoup less than 10% of the losses incurred by major Fei investors, such as Frax Finance and Olympus DAO. Sam Kazemian, CEO of Frax, called the protocol’s actions fraud. Fei’s team maintains it did nothing wrong.

“This is the most important fact to clear up,” Fei’s founder Joey Santoro told Blockworks. “The first vote was a snapshot signaling poll that was non-binding.”

The second vote, which was on the chain and binding, was the poll that actually mattered, according to Santoro. Fei does not see the April hack as his own responsibility, as the hacked Fuse Protocol was run by Rari, who is still under a different team than Fei – despite the merger.

Feis’ hand-waving around the post-hack votes illustrates how DAOs are not always permissionless, with insider development teams sometimes controlling governance decisions and making centralized decisions behind the scenes.

“At the end of the day when crap hits the fan and it’s about money, there’s no protection,” Prosperi said. “It’s back to the rule of the jungle.”

Fortunately for victims of the Fei hack, Fei’s team decided not to push the advantage. After Fei faced a firestorm for his proposed partial repayment plan, another Snapshot vote supported full repayment, and a fourth vote, passed and carried out Monday, returned the lost funds.

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