Hector Network to Liquidate $16 Million in Treasury After Multichain Hack

Fantom-based Hector Network will redeem HEC tokens against funds in the Treasury after a community vote ended on Monday with 81% in favor of liquidation.

Hector Network, a protocol built on the Fantom blockchain, proposed two options for its community to vote on after suffering significant losses from the Multichain hack earlier this month.

The proposal called for either liquidating the protocol entirely and redeeming its native HEC tokens against the $16 million worth of assets in its treasury, or migrating the network to a different chain under a different brand.

Dear Hectorians,
HIP 42 has concluded with a majority vote (83.31%) in favour of the liquidation of Hector Network and redemption of the $HEC token against the funds in the treasury.
More info: https://t.co/bhglrMfEm2 pic.twitter.com/7UKsUmXPcO

— Hector Network (@Hector_Network) July 17, 2023

The 48-hour vote concluded on Monday, with 83% of the community in favor of liquidation. According to a post on the protocol’s Discord channel, the process of winding down will take six to 12 months after the appointment of a liquidator, legal counsel and an auditor.

The value of HEC is down 62% over the last seven days, and is currently trading at $1.17. The protocol’s stablecoin TOR lost its peg to the U.S. dollar after the Multichain exploit, falling 85% to around $0.14 at the time of writing.

Although the Multichain exploit dealt the final blow, Hector’s troubles began much earlier with several members of its community accusing the project of mismanaging the funds in its treasury and “slow-rugging” investors. 

According to data from DeFiLlama, Hector’s treasury once held more than $116 million worth of funds, but has steadily depleted over time. In June, the team disclosed that it had suffered a cross-chain bridge exploit, which resulted in the loss of $650,000 USDC.

“The team has demonstrated, over the course of 18 months, through various actions both mentioned here and in the Community Discord, that their number one priority isn’t the token holders,” said pseudonymous community member “Lilbagscientis” to DL News last month.