Another Crypto Project Shuts Down This Week After $8.4 Million Hack

Just months before the incident, Bunni had been hailed as one of DeFi’s most promising liquidity protocols. Its Liquidity Distribution Function, an algorithmic tool designed to boost yield for liquidity providers, attracted massive inflows throughout the summer. Between June and August, the project’s total value locked (TVL) ballooned from just over $2 million to nearly $80 million, according to DefiLlama data — a staggering 35-fold increase in two months.

That momentum ended overnight. On September 2, an attacker exploited vulnerabilities in Bunni’s codebase on both Ethereum and Unichain, draining millions in tokens. Within hours, the protocol was halted, and all operations froze as developers raced to contain the damage.

“Too Expensive to Recover”

More than six weeks later, the Bunni team has accepted defeat. In a final message posted on X, the developers said relaunching the protocol would demand six- to seven-figure audit and security expenses, far exceeding their remaining funds.

“The exploit effectively stopped all momentum,” the post explained. “Without extensive audits and monitoring systems, we cannot safely operate. Those costs are simply out of reach.”

The team admitted that most of its capital had already been depleted in the aftermath of the breach. Development funds, community incentives, and liquidity recovery reserves were all but exhausted. “Even if we wanted to restart,” one member added, “it would be financially reckless to do so without proper safeguards.”

Turning Off the Lights, But Leaving the Door Open

Rather than disappearing entirely, Bunni is leaving behind a parting gift for the broader developer community. The project’s v2 smart contracts have been re-licensed under the MIT open-source license, freeing anyone to build upon its codebase.

This decision allows developers to experiment with Bunni’s core innovations — including its liquidity rebalancing model, surge fee mechanism, and autonomous yield optimization tools — without restriction. Some community members have praised this move as a dignified exit for a team that lost almost everything but still chose transparency over silence.

Users who still have assets locked on the protocol will be able to withdraw funds via the official website. Once all withdrawals are processed, the remaining treasury will be distributed to holders of BUNNI, LIT, and veBUNNI tokens, pending legal clearance. The developers themselves have waived their share of the remaining funds, saying that the priority is returning value to affected users.

In parallel, Bunni confirmed that it is collaborating with law enforcement to track down the attackers and recover stolen funds — though the likelihood of full restitution remains unclear.

A Reflection of a Broader Trend

Bunni’s downfall isn’t an isolated case. Earlier this week, Kadena’s founding team also announced that it would wind down operations, citing prolonged market stress and capital shortages. While the Kadena blockchain will continue to operate under community management, the project’s leadership has stepped away — sending its native KDA token tumbling more than 70% in two days, according to CoinGecko.

The dual announcements underscore the mounting strain on mid-sized crypto projects navigating an unforgiving bear market. With institutional funding drying up and exploit risks rising, even technically solid teams are finding it difficult to recover once their security or liquidity is compromised.

The End of Bunni’s Short Era

For many in DeFi, Bunni’s story is a familiar one: rapid growth fueled by innovation, undone by a single vulnerability. The project had gained attention for pushing automated market-making forward, but its fate now mirrors that of dozens of other protocols that underestimated the cost of post-exploit recovery.

Still, its decision to open-source its code ensures that its legacy will persist in some form. Developers can continue to experiment with its designs, potentially applying its liquidity distribution logic to future decentralized exchanges.

While the Bunni platform itself will fade into history, its innovations — and its mistakes — will likely inform the next wave of DeFi builders trying to balance ambition with security.

A Cautionary End

Bunni’s demise leaves a sobering reminder across the industry: technological progress alone isn’t enough to sustain decentralized systems. In a space where a single exploit can erase years of development overnight, financial resilience and thorough security architecture have become as essential as innovation itself.

The project’s journey from explosive growth to total shutdown encapsulates both the promise and peril of decentralized finance — a frontier that rewards creativity but punishes vulnerability without mercy.