Refund Plan for Recovered Assets

The protocol will return the $8 million in recovered tokens, secured by whitehat teams and Balancer internal security, to affected users in the same token types. StakeWise separately handles $19.7 million in osETH and osGNO positions with an independent recovery timeline.

Whitehat actors, who helped secure funds ahead of the hacker, will receive 10% of the recovered assets as rewards, paid in the same token types. Some chose to waive their rewards, highlighting ethical hacking compliance under Balancer’s Safe Harbor Agreement.

Affected users will connect their wallets, verify balances via snapshot, and accept a short legal agreement. Approved claims are paid instantly. The claim window is expected to be open for 90–180 days, after which unclaimed funds may be redirected by DAO vote.

Market Impact and Behavioral Analysis

Following this, the attacker recently moved 6,999 ETH to a new wallet, triggering increased attention and scrutiny on on-chain analytics platforms. After the exploit, Balancer’s TVL dropped from $775 million to $258 million, and the BAL token lost roughly 30% of its value. Meanwhile, the announcement of the refund plan led to a 2% recovery in BAL price over the past 24 hours.

The root cause of the attack was minor rounding errors in some v2 pool balance calculations. This flaw created extremely unbalanced pools, enabling manipulation that drained millions of dollars.

DeFi Security Test

This refund initiative emphasizes transparency and strengthens investor confidence. The DAO expects the claim portal to go live in late December or early January, while StakeWise recovery follows its own schedule. The case underscores the importance of secure DeFi protocols for future investor trust.

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What Is Overlay Protocol?

Built on the Arbitrum blockchain, this protocol offers markets based on non-manipulable and unpredictable numerical data feeds. This makes Overlay unique within the Ethereum ecosystem, providing deep liquidity and eliminating the need for traditional swap mechanisms.

Overlay Protocol Market Types

Overlay aims to offer various markets based on non-manipulable and unpredictable data feeds. These include:

• Non-traditional crypto markets: Hash rate, gas fees, BTC difficulty, NFT floor prices, social tokens, yield rates, etc.
• Non-crypto markets: E-sports and sports, sneaker prices, scalar social-political markets, nature and science markets, etc.

This broad scope allows Overlay to facilitate trading on digital data streams, setting it apart in the DeFi space.

How Does Overlay Offer Markets Without Counterparties?

In Overlay, users build positions directly against the protocol or, more precisely, against all OVL token holders simultaneously. This model provides deep liquidity without requiring liquidity providers or traditional swap-based counterparties. The dynamic minting or burning of OVL tokens is used to manage inflation risk. For more details, refer to the protocol’s official documentation.

Pricing and Oracle Usage

Pricing in Overlay markets is not dynamic in the traditional sense; it relies on data intermittently fetched from oracles. These values are adjusted by built-in protocol mechanisms. Overlay can integrate nearly any oracle, provided the feed is non-manipulable and unpredictable. For instance, Chainlink-like oracles support data streams like the Consumer Price Index (CPI), enhancing the platform’s flexibility.

How Does Trading Work? (Collateral and Profit/Loss)

To open a position in Overlay markets, users must lock OVL tokens as collateral. Profit and loss (PnL) are settled in OVL. If a position is profitable, the protocol mints OVL to pay the user; if it incurs a loss, the locked OVL is burned to the extent of the loss. This dynamic mint-and-burn mechanism supports the platform’s liquidity and community incentives.

Overlay Protocol (OVL) Tokenomics

OVL is the native ERC-20 token of Overlay Protocol, serving two primary functions:

• Trading Participation: Users lock OVL as collateral to open positions in Overlay markets. Profitable positions lead to OVL minting, while losses result in OVL burning.
• DAO Governance: OVL holders can vote on governance proposals, contributing to the community’s development.

Token Details:

• Symbol: OVL
• Initial Supply: 88,888,888
• Maximum Supply: 1,000,000,000 (per certain launch partner requirements; however, the protocol follows a deflationary trend and has no plans to reach this level).

Token Allocation:

• Ecosystem: 42%
• Airdrop: 9%
• Marketing: 8%
• Strategic Partners: 28%
• Overlay Foundation: 13%

Overlay Protocol (OVL) Vesting Schedule

Nature of Contracts

Positions in Overlay markets resemble perpetual futures contracts (perps), with no expiration date or physical delivery, allowing contracts to roll over indefinitely. However, Overlay contracts have distinct features compared to traditional perps. For more details, refer to the protocol’s official documentation.

Governance

Overlay Protocol is governed by the PlanckCat DAO, and in the future, OVL token holders will have voting rights. Voting weights are as follows:

• 1 PCD NFT = 100,000 votes
• 1 OVL token = 1 vote

This balance may change in the future. The PlanckCat DAO enables Overlay contributors to participate in governance through PCD NFTs, playing a central role in decision-making, such as listing or delisting markets and setting risk parameters. Non-PCD NFT holders can still engage in discussions via Discord and the Governance Forum.

How Is Overlay Different?

What Are Perpetual Futures Contracts (Perps)?

Perps are a popular derivative contract type in crypto markets, allowing users to take long or short positions on an underlying asset without owning it, while paying or receiving funding based on market conditions. Unlike traditional futures, perps have no expiration date or asset delivery, rolling over indefinitely. Overlay market contracts share this structure but include unique features.

Oracle-Based Pricing

Overlay uses oracle-based data feeds and native mechanisms for pricing, avoiding centralized limit order books (CLOB) used by traditional exchanges, where prices are based on the last purchase. Other on-chain perp protocols like Perp Protocol and GMX also use oracle-based pricing.

Lack of Traditional Counterparties

Overlay does not require traditional counterparties to take the other side of a position. When a position is closed:

• Profitable positions prompt the protocol to mint OVL for payment.
• Loss-making positions result in the burning of the user’s OVL collateral.

While this carries inflation risk, Overlay mitigates it through risk management mechanisms.

No Limit Orders

Overlay v1 does not support limit orders; only market orders are executable. Traditional CLOB or liquidity pool-based exchanges typically support limit orders.

Funding Rates

Overlay calculates funding rates based on open interest imbalances rather than spot-futures price discrepancies. These rates incentivize users to balance long and short positions, reducing imbalances.

Pricing and Price Impact

Overlay relies on oracle data for pricing, using mechanisms like TWAP (Time-Weighted Average Price), bid-ask spreads, and price impact/slippage. TWAP prevents oracle manipulation, with short (e.g., 10-minute) or long (e.g., 1-hour) TWAPs selected based on price stability. Bid-ask spreads prevent frontrunning of short TWAPs and protect against sudden price spikes. Price impact is adjusted based on order size and market liquidity.

Risk Management: Payoff Caps, Open Interest Caps, and Circuit Breaker

Overlay manages OVL inflation risk with the following mechanisms:

• Payoff Caps: Per-position limits on profit/loss, set by the DAO for each market.
• Open Interest Caps (OI Caps): Per-market limits on total open interest, determined by the community to quantify inflation risk.
• Circuit Breaker: Temporarily adjusts OI caps to cool markets after large payouts, limiting new position sizes.

Overlay Protocol Investors

Protocol has raised $2.22 million, backed by prominent investors such as Polychain Capital, ParaFi Capital, 1kx, The LAO, MetaCartel Ventures, Jets Capital, GTS Ventures, Ben Middleton, and Sky Wee. This strong support underscores the project’s credibility in the DeFi community.

Official Links

• Website
• X (Twitter)
• Whitepaper

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High Rebate Rates as Incentives

Under the new program, liquidity providers will receive rebates ranging from 0.005% to 0.01%, based on their trading volume. Binance aims to reduce the dominance of large market makers with this system and establish a more balanced structure.

Participants who provide at least 0.5% liquidity on altcoin pairs can receive a 0.5 bps rebate. To reach a 1 bps rebate, participants must exceed the 1% liquidity threshold. Applications will start on June 9, and rebate payments will go into effect as of June 17.

Flexible Structure for Altcoin-Focused Strategies

The program makes it easier for investors with different volumes and strategies to participate. Users who have traded over $20 million in the past 30 days on Binance Spot, Margin, or other platforms will be eligible to apply. This allows both small and medium-sized participants to engage in profitable market making.

Initially, the program will be limited to 18 altcoin/USDT pairs. Notable projects included are STO, SYRUP, SXT, BABY, WCT, FIL, TON, ONDO, KMNO, W, KERNEL, ICP, PARTI, HYPER, EOS and INIT. Binance stated that this list will be updated regularly based on market demand.

Next-Generation Market Maker Model

Catherine Chen, Head of VIP and Institutional at Binance, stated that this new approach offers a significant opportunity for participants who focus on altcoin strategies. Thanks to this model, investors can actively engage in the market with custom strategies, rather than being restricted to major cryptocurrencies like Bitcoin.

The program’s benefits include reducing slippage, increasing market depth, and enhancing trading efficiency. This innovative model could help build a healthier and more sustainable trading environment for the altcoin ecosystem.

This new liquidity program can be seen as part of Binance’s long-term vision for altcoin markets. It marks an important step toward enabling more investors to play an active role in an evolving and diversified crypto landscape.

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Sui Validators Approve Major Recovery Plan

After Cetus, a decentralized exchange, was exploited for over $220 million on May 22, Sui validators acted quickly to freeze $162 million in digital assets. The fate of these funds was determined through a governance vote concluded on May 29.

With 90.9% of validators voting in favor, the recovery proposal passed. The frozen assets will now be transferred to a multisignature wallet and held in trust until distributed to affected users, according to Sui’s official announcement.

You Might Be Interested In: Elon Musk Talks About the Name of a New Memecoin!

This move signals a pivotal step toward financial restitution for those impacted by the exploit.

Validator Intervention Sparks Governance Debate

The swift validator action reignited debate within the crypto world. While decentralization purists voiced concern over the ability to freeze onchain assets, others praised the move as an effective counter to escalating security threats in DeFi.

The recovery initiative extends beyond the frozen funds. It will also leverage Cetus’ own treasury and an emergency loan from the Sui Foundation to fully restore protocol operations.

Cetus Targets Full Recovery Within One Week

Cetus expressed appreciation for the rapid community support and outlined a full roadmap for protocol recovery. The first phase involves upgrading validator nodes to transfer the funds to a multisig wallet, followed by system restoration.

The team expects a full restart within one week. All liquidity providers will regain access to their assets, while remaining losses will be compensated via a dedicated smart contract currently undergoing auditor review.

Cetus emphasized that this compensation mechanism will ensure fair restitution for all affected users.

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