Kinto Token Drops 80% on Ethereum Layer-2 Shutdown Plan
Kinto token collapsed over 80% after the team announced shutting its Ethereum layer-2 network on Sept 30. The move follows a July exploit that leveraged an OpenZeppelin ERC-1967 Proxy vulnerability to mint 110,000 fake Kinto tokens on Arbitrum and drain 577 ETH (~$1.9 M) from Uniswap and Morpho pools. Under the Phoenix Program, Kinto raised $1 M in debt to stabilize post-hack, but mounting liabilities, failed fundraising and unsustainable yields forced the shutdown. Remaining assets of ~$800,000 will reimburse Phoenix lenders (~76% recovery), while Morpho hack victims can claim up to $1,100 each from a $55,000 goodwill fund partially backed by co-founder Ramon Recuero’s $130,000 pledge. Users must withdraw assets by Sept 30; in October, an Ethereum mainnet claim contract and an ERA airdrop (Oct 15) will allow balance recovery, with any surplus returned via Snapshot governance. The Kinto token now trades at $0.38, marking co-founder Recuero’s second failed DeFi project after Babylon Finance’s 2022 exploit.
Bearish
The news of Kinto token’s imminent shutdown and the preceding $1.9M hack has severely undermined market confidence, triggering an over 80% price collapse. Short-term trading is likely to remain dominated by sell-offs as holders rush to withdraw assets before the September 30 deadline and assess recovery prospects. The planned reimbursements and airdrop may offer some support, but limited liquidity and outstanding liabilities will restrain significant rebounds. In the long term, Kinto’s failure highlights persistent security risks in Ethereum layer-2 projects and could deter new investment, suggesting sustained bearish pressure unless robust audit and governance measures are implemented.