The September 7 attack, traced by security firm PeckShield, targeted vulnerabilities introduced by a developer and left Nemo’s liquidity pools drained. Within hours, the protocol was paused, and an onchain snapshot of user balances was taken. Those balances are now the reference point for calculating reimbursement.

How the NEOM Tokens Work

Instead of direct dollar-based compensation, Nemo will issue NEOM tokens tied to the value of user losses. Token holders will face a choice: sell immediately through a liquidity pool paired with USDC, or hold NEOM and wait for future redemptions as funds are recovered.

Recovered assets from the exploit, along with liquidity injections from outside investors or loans, are set to be deposited into a redemption pool. Nemo also pledged to burn NEOM tokens over time, publishing updates on a dedicated tracking site to maintain transparency.

Migration to Audited Contracts

Users won’t just be left with paper promises. Nemo has outlined a migration process allowing affected accounts to move residual assets from compromised pools into new, audited contracts with multi-party oversight. This shift, the team argues, will provide a safer environment while the debt token model runs its course.

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Following the Stolen Funds

In its post-mortem, Nemo revealed that the stolen assets were funneled from Sui to Ethereum through Wormhole’s CCTP bridge. The team says it is coordinating with security experts and exploring white-hat negotiation frameworks to maximize the chances of recovery.

A Critical Moment for Sui DeFi

Debt tokens as compensation have precedent in decentralized finance, but they’re far from risk-free. For the Nemo community, the success of NEOM will depend on whether the redemption pool can be filled quickly enough to restore confidence. For the broader Sui ecosystem, the episode has become an early test of how new networks handle crises in a sector where security lapses remain all too common.

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