MANTRA Proposal Moves 37,957,488.23 Frozen Tokens to OM Upgrade Incentive Fund
Key Facts
Governance Proposal No. 40 on the MANTRA network opened a vote on transferring 37,957,488.23 MANTRA tokens frozen at the exploiter’s address to the OM Upgrade incentive fund in the network’s next software upgrade. The proposal, titled "Recovery of the Exploiter’s Frozen Funds," sets out a mechanism to redirect this specific balance to the fund, rather than treating it as a recovery of funds that reached a centralized exchange. According to the proposal, the transfer is intended to reduce the incentive fund shortfall left by the security incident. The proposal does not include recovery of tokens deposited with the exchange as part of this transfer, since that path depends on separate cooperation with authorities and the exchange operator. Voting remains open until November 13, 2026, at 04:10:11, according to the time displayed on the governance portal.
The proposal distinguishes the balance at the penalized address from most of the tokens that left the network after the incident. The exploiter’s address was penalized at the protocol level following the security incident on August 20, 2026, preventing the funds from being transferred under the current configuration; moving the frozen balance therefore requires action in a software upgrade. The proposal says most of the withdrawn tokens were deposited with a centralized exchange. Efforts to recover those funds are being pursued in cooperation with Hong Kong law enforcement and the exchange operator. The amount that may be recovered is not yet known, so the proposal gives no final tally or completion date for the exchange recovery effort.
The proposal sets out the shortfall figures before and after the transfer to define the step’s accounting impact. The previous shortfall in the OM Upgrade fund stood at 120,923,932.44 MANTRA, while the proposal estimates that it will remain at 82,966,444.21 MANTRA after the specified frozen balance is transferred. The proposed balance therefore does not cover the entire shortfall, but reduces it according to the calculations in the proposal. This comparison helps clarify the intended destination of the funds: the priority is to add the balance to the incentive fund up to the shortfall amount. If recovered funds exceed that shortfall, the proposal says the surplus will be permanently burned. It does not specify another use for the surplus or link it to a guaranteed outcome for token holders.
The transfer effort follows an incident that MANTRA Chain said occurred on August 20, 2026, when 720,923,967.99 MANTRA tokens were moved from two addresses without authorized transactions. The post-incident report said 600,000,035.56 tokens left the burn address, while 120,923,932.44 tokens came from an old multisignature wallet linked to an incentive campaign. The company valued the total tokens moved at about $3.6 million, based on the pre-incident price of $0.005 per MANTRA at the end of that day UTC. It said the network remained unavailable for 30 hours and 13 minutes, and that deposit and withdrawal suspensions at some exchanges lasted longer. Its review attributed the exploit to an integer overflow bug in the balance accounting layer of an external Cosmos EVM component used by the network.
MANTRA also said in its report that validator, administration, governance and multisignature wallet signatory keys were not compromised, and that customer accounts were not debited. In an update dated August 28, the company said no tokens had been recovered by that date and that recovery efforts remained part of law enforcement’s work. The current governance proposal provides a separate path for handling the balance that remained frozen at the exploiter’s address, alongside efforts to recover funds deposited with the exchange. The total amount recovered therefore remains unresolved, while the proposal mechanism sets out in advance how any recovery will be directed relative to the fund shortfall. The proposal asks the team to submit additional measures to mitigate the incident’s impact through a separate governance proposal once the final unrecovered amount is known, with a deadline of June 30, 2027.