Cetus Protocol, a decentralized exchange and concentrated liquidity market maker on Sui and Aptos, has relaunched just two weeks after a major security breach disrupted its CLMM pools. The restart marks the protocol’s shift from emergency response to liquidity restoration and user compensation.
To stabilize the affected pools, Cetus said it injected $7 million in major assets from its treasury and secured a $30 million USDC loan from the Sui Foundation. Liquidity for users in unaffected pools remains unchanged. For impacted pools, however, the recovery rate currently ranges from 85% to 99%, depending on the severity of damage in each pool. The protocol added that LP functions for those users will resume normally, while their position NFTs will remain valid as certificates for claiming CETUS compensation, even if liquidity is fully withdrawn later.
Hack aftermath and frozen funds
The relaunch follows an exploit tied to an overflow check vulnerability in Cetus’ liquidity calculation function, which allowed attackers to drain more than $220 million in digital assets. Still, a joint validator response reportedly froze $162 million of the stolen funds, limiting the scale of the loss.
In the days after the exploit, Cetus said it would pursue an on-chain vote to authorize recovery of the frozen assets. It also offered a bounty in exchange for the return of funds, warning that failure to cooperate would lead to legal action. In its latest update, the protocol confirmed that the bounty was not claimed and that it is now pursuing legal action across multiple jurisdictions.
15% of CETUS supply allocated for compensation
As part of its recovery plan, Cetus said it will allocate 15% of total CETUS supply to a compensation contract. That figure includes the team’s remaining unvested token allocation, which accounts for 10% of total supply. Under the plan, 5% becomes claimable immediately at relaunch, while the remaining 10% will unlock linearly each month over the next 12 months starting June 10, 2025.
Cetus said the structure avoids additional token inflation because it relies on existing supply rather than minting new tokens. If more stolen funds are recovered in the future, those assets may be used to give users the option to exchange remaining CETUS compensation for USDC, repay the Sui Foundation loan, or, once the compensation period ends, fund larger CETUS buybacks that would be stored in the community treasury.
While the relaunch does not erase the damage from the exploit, it provides a clearer framework for restoring protocol operations, compensating users, and managing recovered assets. For the broader Sui ecosystem, the episode also highlights the importance of rapid validator coordination, treasury backstops, and post-hack governance tools.