Nemo Protocol, a yield-trading platform built on the Sui blockchain, has rolled out a compensation plan for users affected by its recent $2.6 million exploit. The initiative centers on issuing debt tokens called NEOM, designed to represent users’ losses in U.S. dollar terms.
In a blog post published Sunday, the project acknowledged it could not directly reimburse users in USD due to limited reserves.
“While we would have preferred to reimburse everyone directly in USD, we do not have sufficient funds or capital raised to do so, which is why we adopted the debt token strategy as the most viable path forward,” Nemo wrote.
How the exploit unfolded
The security breach, reported on September 7 by blockchain security firm PeckShield, drained $2.6 million from Nemo’s market pool. According to the protocol, the attack was enabled by vulnerabilities in code introduced by a developer and deployed without proper auditing. Nemo paused operations immediately after the exploit and conducted an onchain snapshot to calculate user losses.
The three-step recovery plan
Nemo outlined a structured approach to compensation:
- Migration and token issuance – Users will migrate residual assets from compromised pools to new, audited contracts managed by multiple parties. During this process, they will receive NEOM tokens equal to their recorded losses.
- Exit or hold options – Token holders may either sell their NEOM through an automated market maker (AMM) pool or retain them and wait for potential recovery. Nemo plans to seed an initial liquidity pool on a major Sui-based decentralized exchange, pairing NEOM with USDC to enable immediate exits.
- Redemption pool for recovered funds – Any funds recovered from the exploit will be deposited into a multi-party managed pool. NEOM holders will be able to claim their share proportionally. Nemo also said it would allocate a portion of external liquidity loans or strategic investments to support this pool.
To bolster transparency, Nemo will launch a dedicated website tracking NEOM’s burn progress and publishing real-time updates.
Next steps in recovery efforts
In its post-mortem, Nemo confirmed the stolen funds had been moved from Sui to Ethereum through the Wormhole CCTP bridge. The protocol is now collaborating with security teams on Sui to trace the funds, while also setting up a white-hat agreement framework and hacker bounty program.
The bottom line
Nemo’s debt token approach may not provide instant relief for users, but it reflects a structured path toward restitution while keeping the protocol afloat. By combining token-based compensation with ongoing fund recovery efforts, the platform is aiming to rebuild trust with its community after a difficult setback.
