In the wake of a massive $260 million exploit targeting the Cetus protocol, the Sui Foundation has announced it will abstain from voting in an upcoming on-chain governance proposal to determine the recovery of approximately $162 million in frozen digital assets.
The move comes after a swift and coordinated response by the Sui validator network earlier this week, which led to a partial freeze of the stolen assets. The Foundation emphasized that while it will not participate in the vote, it fully supports the community-led decision-making process and insists that Cetus meet specific conditions for the vote to proceed transparently.
Community Governance in Action
The proposal, initiated by Cetus, requests a protocol upgrade that would enable the return of the immobilized assets without reversing any transactions or compromising blockchain immutability. This decision, the Foundation stated, is solely in the hands of validators and token stakers.
“This is an extraordinary request in response to extraordinary need – Cetus’s customer funds are at stake,” the Sui Foundation said in a public statement. It clarified its stance as a neutral facilitator, underscoring that it will not influence the vote’s outcome.
Freeze Mechanism and Validator Response
Following the breach, Sui validators acted quickly to prevent further drainage of funds. By modifying validator configuration files, over one-third of validators by stake weight blocked transactions from two known attacker-linked addresses, freezing $162 million in assets.
However, an estimated $60 million was transferred off-network before the freeze was fully enforced. Cetus is actively collaborating with cybersecurity firms and international law enforcement, including Inca Digital, in hopes of recovering these unretrievable funds.
The freezing mechanism allows validators individual discretion in filtering transactions. Each node operator can activate or disable this filter independently, making it a decentralized but effective response tool during protocol emergencies.
Conditions for Vote Support
The Sui Foundation outlined two key conditions for endorsing the vote procedure:
- Strict Neutrality: The Foundation will not take a stance on the outcome of the vote, reinforcing its role as a governance facilitator.
- Customer Restitution Commitment: Cetus must commit publicly to allocating all available financial resources toward fully reimbursing affected users.
Cetus has agreed to honor the vote’s decision and has previously offered a $6 million bounty to the hacker to incentivize the return of the stolen funds.
What’s Next?
The upcoming governance vote will be a major test for decentralized protocol resilience and the role of community-driven decision-making in times of crisis. All SUI stakers and validators are eligible to participate.
As blockchain ecosystems grapple with the growing complexity of protocol security and community governance, the Sui-Cetus incident stands as a defining moment highlighting both the vulnerabilities and the democratic strengths of decentralized finance.
