Unizen, a decentralized finance (DeFi) protocol, has pledged to promptly reimburse users who suffered losses of $750,000 or less following a significant security breach that resulted in the loss of approximately $2.1 million in user funds.

The breach was identified and evaluated by blockchain analytics firms PeckShield and SlowMist on March 9.

PeckShield initially detected an "approve issue" on March 9, leading to the revelation that over $2 million had been siphoned from the platform. SlowMist's investigation confirmed that the total losses amounted to around $2.1 million, noting that the stolen funds were converted from Tether (USDT) to the stablecoin Dai (DAI).

The hacker exploited a vulnerability in an external call within the Ethereum-based contract, converting the stolen USDT to DAI. The funds are currently static, and users are encouraged to revoke any approvals linked to the hacker's address to prevent further losses.

In response to the breach, Unizen proactively communicated with the hacker through an on-chain message on March 10, offering a 20% bounty for the return of the remaining stolen assets. Additionally, the company has collaborated with law enforcement and forensic experts to identify the hacker.

Despite ongoing negotiations for the bounty, Unizen announced on March 11 its intention to initiate compensation for 99% of the victims immediately. The company prioritizes a meticulous and personalized approach to the reimbursement process.

Sean Noga, Unizen's founder and CEO, has personally contributed funds to expedite reimbursements, ensuring that users with losses below the $750,000 threshold receive their funds back in either USDT or USD Coin (USDC). Cases involving losses exceeding $750,000 will be addressed on an individual basis. Additionally, Unizen has published a video guide to aid users in revoking platform approvals to mitigate further risks.

Martin Granström, Unizen’s Chief Technology Officer, disclosed on the social media platform X that comprehensive evidence has been collected for an incident report, which will be released in collaboration with external third-party firms. Granström also reaffirmed the company's dedication to bolstering its security measures to prevent future incidents.

This incident underscores the pressing need for the DeFi sector to consistently reassess and enhance security measures to safeguard user assets from sophisticated online attacks. In a recent event last month, Seneca Protocol experienced a severe security breach, resulting in a sharp 65% decline in the price of its SEN token. CertiK reported that the attacker exploited a flaw within the protocol, absconding with digital assets valued at approximately $3 million. Additionally, the perpetrator transferred 1,000 ETH between two separate accounts, leading to total estimated damages of around $6.4 million.