WazirX has announced plans to launch a decentralised exchange (DEX) and resume its platform’s operations. This move aims to help compensate users affected by a large-scale cyberattack in which the company’s multisignature wallet was hacked, resulting in losses worth Rs 2,000 crore. The new DEX and revamped platform will introduce features like crypto staking, an over-the-counter (OTC) desk, and futures trading, creating revenue streams dedicated to reimbursing affected users.
Recovery tokens to compensate users
To aid users impacted by the hack, WazirX plans to issue “recovery tokens” to creditors, representing 48 per cent of their lost funds. Distributed on a pro-rata basis, these tokens offer users flexibility: they can either be traded for immediate compensation or held with the expectation of long-term recovery through future platform profits. This approach aims to give affected users access to some liquidity while providing a path for potential full recovery.
Focus on decentralised finance
According to WazirX’s Founder and CEO, Nischal Shetty, the new DEX will offer an easy-to-use interface, similar to centralised exchanges, making decentralised trading more accessible. Shetty noted a growing preference among crypto users for self-custody, where individuals maintain control over their assets. This trend aligns with the security benefits of DEXs, which allow users to directly manage their trades and assets without relying on a centralised system vulnerable to attacks.
Despite growing interest in DEXs, decentralised exchanges currently represent only 13-15 per cent of global crypto trading volumes and are used by less than 5 per cent of the world’s crypto traders. WazirX aims to tap into this market while encouraging more users to adopt self-custody.
WazirX expects to roll out the new platform and a test version of the DEX by February. Users holding recovery tokens will have the option to exchange them for DEX tokens, tying the company’s compensation strategy to decentralised finance innovations. Profits generated by both the new DEX and the updated WazirX platform will go towards reimbursing creditors.
In its efforts to recover from the attack, WazirX is operating under a restructuring moratorium granted by a Singapore court. However, financial advisors warn that despite these efforts, only around 57 per cent of the losses may be reimbursed, potentially leaving users with unrecovered losses of approximately Rs 850 crore.