Tensions are heating up between Sushiswap and Lido, two major players in the decentralized finance (DeFi) space, following a proposal aimed at returning 40 ETH stolen during a Sushiswap hack in April. This tense interplay, mired in a contentious governance vote, has unfolded into a gripping crypto drama.
The incident involves a hefty hack worth millions, a hotly contested crypto Twitter feud, and weeks of high-stakes decentralized governance spectacle. DeFi projects have historically faced scrutiny over rampant hacks and the often questionable decision-making of the decentralized organizations behind them.
This controversy kicked into high gear when Sushiswap began attempts to reclaim the funds lost during a whopping $3.3 million hack. These efforts were quickly stymied by the complex politics of Lido’s governing body, LidoDAO. Despite a second attempt at recovery currently in motion, prospects seem grim.
The bulk of the funds stolen during Sushiswap’s April hack were funneled into a Lido vault contract, which automatically allocated them to Lido stakers and node operators. There’s no contention over these funds, but the focus has shifted to the 40 ETH (around $72,000) that found its way into Lido’s treasury - a sum Sushiswap is keen on recovering.
In a move to support Sushiswap’s efforts, LidoDAO proposed a governance vote on May 4 to decide on whether to return the 40 ETH from its treasury back to Sushiswap. Though the majority of Lido token holders voted in favor of returning the funds, the total fell short of the necessary 50 million votes to meet quorum.
A second governance proposal was put forth by LidoDAO on May 18, but early indications show even lower participation levels and a shift towards a 'no action' stance, further escalating the tension between the two DeFi projects.
Following the unsuccessful initial vote, Sushiswap's Head Chef, Jared Grey, took to Twitter to brand Lido’s actions as "theft." He accused Lido advisor and anonymous DeFi user Hasu of manipulating DAO procedures to hinder the fund return process.
However, a member from the Lido team, who requested anonymity, refuted Grey’s accusations, stating that the Sushiswap team made a series of careless mistakes. They pointed out Sushiswap's failure to properly audit the exploited smart contract and criticized Grey's misleading claims about the amount of ETH received by Lido's treasury.
Adding another layer of intrigue, the hacked wallet in the Sushi exploit belongs to sifuvision.eth, controlled by the pseudonymous crypto personality 0xSifu. Interestingly, 0xSifu was the treasurer of the defunct DeFi project Wonderland and was later exposed as a former executive of the notorious Canadian crypto exchange Quadriga, which met a disastrous end in 2019.
