PiggyBank discloses details of the LAB basis trading manipulation incident and will compensate affected users

PiggyBank released a detailed report on the LAB incident on June 6, stating that the protocol experienced a net withdrawal of approximately $579,000 on June 6, primarily due to a LAB token basis trade being manipulated by the market.

In early May, PiggyBank purchased 142,800 locked LAB tokens (approximately $102,500) through an OTC intermediary while simultaneously opening a perpetual contract short hedge. However, market participants continuously maintained the spot price above the perpetual contract price, resulting in a deeply negative funding rate (annualized -17,000%), and the high hedging costs forced the shorts to close, resulting in a loss of approximately $476,000. The currently locked LAB tokens have a spot value of about $1 million, but due to poor liquidity and lack of hedging, they have been excluded from the NAV calculation.

PiggyBank will undergo structural reforms: increasing transparency of on-chain mechanisms, strategy logic, and fund allocation will be publicly verifiable, while basis trading and funding rate arbitrage will be gradually phased out. In terms of compensation, affected users will receive USDC compensation based on actual losses, with funding sources including NAV discrepancies, future LAB sales (expected to unlock from August 14 to October 14, currently valued at approximately $1 million), and 50% of future platform revenue. All users recorded in the snapshot on June 6 are eligible for compensation.