Statement following KuCoin hack

Sep 30, 2020

Following the events of the KuCoin exchange hack at the weekend, we are watching developments carefully and are considering our options with regards to updates to our smart contract.

This statement concerns a suspension of the planned launch of our staking 2.0 upgrade this week, and how potential changes to the smart contract may affect our development roadmap.

The impact of the KuCoin hack on FET

The FET token has not been as badly impacted as some other token networks by the events of the weekend. In total 15.9million tokens were stolen from the KuCoin exchange wallets, which represents around 1.3% of the fully diluted supply of FET tokens.

To date, none of the stolen FET tokens have been liquidated

Since the hack has taken place an admirable effort has been made by the wider industry to blacklist the hacker’s core wallet addresses, limiting their ability to trade on centralised exchanges. Also as the Fetch.ai Foundation is one of the principal suppliers of FET liquidity to Decentralised Exchanges, we have been able as a community to prevent the hacker accessing their ill-gotten gains of FET tokens so far.

The Fetch.ai roadmap

Currently our core FET smart contract is as it was implemented when the FET token launched in February 2019. Originally planned for launch before mainnet v2, the upgrade of our core smart contract will enable seamless interoperability between Ethereum and our v2 mainnet, decentralized control of network functions, as well as updating the core code to recent smart contract developments.

As most of our community are aware, the MTLX stake-drop is concluding on Thursday and the current plan has staking v2.0 about to launch.

This is an important milestone for us as the launch of our updated staking contract then puts Fetch.ai into a pathway to mainnet v2.0 which is scheduled for 2021, through the initiation of a series of incentivised testnets to embed new network functionality.

Impact on the Fetch.ai staking program

We have made the decision to pause staking on the Fetch.ai network temporarily, as any potential required smart contract and token transfer changes will be much simpler if we undertake this important step before beginning the pathway to mainnet v2, rather than during this critical development phase.

Foundation committed to decentralized governance

We want to emphasise that there is no central ‘governor’ in our contract, the Foundation is not able to unilaterally pause the contract, and we remain committed to progressive decentralization of our protocol.

Our incentivized test-network, planned for Q4 embeds the proposed governance changes outlined in our to-be published governance paper.

Impact on affected token holders

KuCoin has repeatedly stated that their Insurance Fund will cover any losses for affected customers (link). However, it is not clear how long this will take, or what the process involved will be.

We reiterate that KuCoin bears all liability and responsibility in this hack to reimburse their users, as stated in their public announcements and warranties. The Fetch.ai Foundation strongly encourages KuCoin to be transparent on exactly how and when they are going to make their users, listed projects, and other stakeholders whole for the damages caused by this security breach.

Future developments

While emerging events have caused the core development team to shift priorities in the short term, we remain committed to delivering on the plan, which sees the following activities to build utility in the FET ecosystem:

  • Staking 2.0, which will launch a decision has been made on timing for our planned smart contract upgrade
  • Enhanced agent developer tools, component sharing and visual/no-code development environments
  • Improved developer tools and ecosystem development program
  • Incentivised testnet, incorporating agents, oracles and random-beacons
  • Mainnet v2.0 in 2021

More on these plans in the coming days.