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- The Initia Foundation approved recovery funding to restore iUSD collateral backing.
- Approved funding caps include specific limits for USDC, Ether, and AUSD0.
- Final payments depend on verifying shortfalls and securing final transfer approval.
The Initia Foundation has approved recovery funding to restore backing for assets used as iUSD collateral after the Oct. 23 exploit.
Initia expects the affected assets to be fully backed when its blockchain resumes. Payments still depend on verifying the shortfalls and obtaining final transfer approval.
Recovery Funding Covers USDC, Ether and AUSD0
The Oct. 28 approval sets funding caps of 1.08 million USD Coin (USDC), 105 Ether (ETH) and 1.4 million AUSD0. The affected collateral consists of Noble USDC, wrapped Ether (WETH) and AUSD0.
The money is intended to replace missing reserves behind those assets and restore their one-for-one backing. Final payments will cover the actual gaps established through reconciliation, within the approved limits.
AUSD0 is Initia’s bridged representation of Agora’s AUSD stablecoin and serves as collateral for Initia’s dollar-linked iUSD token. The announcement does not report completed payments or specify the final amount to be supplied for each asset.
Exploit Drained Bridge Reserves Before the Network Halt
Initia said the attacker moved roughly $2.7 million in assets to Ethereum before the network was paused. Its breakdown included 105 WETH and about 1.4 million AUSD0 through LayerZero, plus approximately 1.08 million USDC through Noble and Circle’s Cross-Chain Transfer Protocol.
Blockchain data provider Bitquery found that the Noble USDC reserve backing balances on Initia fell from about $1.09 million to $63 by 15:37 UTC on Oct. 23. Ordinary users’ withdrawals also failed as the reserve emptied.
The attacker exploited a bug in Initia’s MoveVM script caching, allowing malicious code to bypass security checks, according to the team’s Oct. 24 account. The bug allowed the attacker to create unbacked WETH, iUSD and USDC balances without changing the tokens’ recorded total supplies.
Initia said no native INIT tokens were created through the attack. The team halted its base blockchain and connected rollups at 15:41:30 UTC on Oct. 23, stopping transaction processing across those networks.
Security Audit Precedes Planned Network Restart
On Oct. 27, Initia said a security fix had been drafted and was undergoing an audit with security partners. The team planned to publish concrete asset-restoration and restart arrangements after those audits were completed.
Initia’s Oct. 28 update tied the restoration of full backing to the chain’s resumption but gave no restart date. A day earlier, the team had said it expected the recovery process to finish within days.
