The Kinto token, the governance token of the Kinto Network, has collapsed by more than 80% after the team announced that its Ethereum layer-2 blockchain will shut down at the end of September. The decision comes after months of setbacks, including a major hack and worsening market conditions that prevented further fundraising efforts. The announcement was made in a Medium post on Sunday, where the team explained that operating without salaries since July left them with no choice but to close the project and protect users as best as possible. The crisis began in July when an industry-wide hack drained around 577 Ether, worth roughly $1.6 million, from Kinto’s modular exchange. The vulnerability was traced to the ERC-1967 Proxy standard, a common OpenZeppelin codebase that allows smart contracts to be upgraded without changing their address. Several other protocols were also affected by the flaw. Despite raising $1 million in debt to restore trading, Kinto’s plans for recovery were hampered by a deteriorating market , which “killed further fundraising,” according to the team. High Yields and Market Risks Kinto’s financial strain was also linked to its high annual percentage yield offerings. Even after the hack, Kinto continued to offer yields as high as 130% on USDC staking, one of the highest in the decentralized finance (DeFi) space. This aggressive strategy, according to critics, contributed to unsustainable operations. One onlooker noted that such high yields were a warning sign, especially given the challenges the protocol faced post-hack. Built on the Arbitrum network and leveraging Ethereum for settlements, Kinto aimed to combine centralized exchange efficiency with decentralized exchange security. It also offered tokenized stock trading, featuring assets like Apple, Microsoft, and Nvidia. Kinto Shutdown Plan and Support for Affected Users Kinto’s recovery plan includes distributing its remaining assets, including $800,000 in Uniswap liquidity, to “Phoenix” lenders who helped fund its relaunch. These lenders are expected to recover approximately 76% of their loan principal. The team is also establishing a “goodwill grant,” with each affected user receiving $1,100. Founder Ramon Recuero has pledged over $130,000 of his own funds to assist victims. If recoveries exceed victim amounts, the surplus will be distributed through community voting on Snapshot. Users have been urged to withdraw assets by September 30, after which claims will be processed through a perpetual claim contract. This marks the second failed venture for Recuero, who previously shut down Babylon Finance following a $3.4 million hack in 2022. Since the shutdown announcement, Kinto’s token has dropped 81.4% to $0.46, with its market cap barely above $1 million—down from a $14.5 million peak just a month ago. The post Kinto Token Plummets Over 80% as Network Announces Shutdown appeared first on TheCoinrise.com .
