The Kinto token, the governance token of the Kinto Network, has collapsed by more than 80% after the announcement of the shutdown of the Ethereum layer-2 blockchain.
Reasons for Kinto Network Shutdown
The team faced multiple setbacks, including a major hack and worsening market conditions that hindered further fundraising efforts. This was announced in a Medium post where the team explained their lack of salary since July left them with no choice but to close the project and protect users.
Financial Situation and Risks
Kinto's financial strain was also linked to its high annual percentage yield offerings. Even after the hack, Kinto continued to offer yields as high as 130% on USDC staking, which drew criticism and risks for sustainability. Observers noted that such high yields were a warning sign.
Shutdown Plan and User Support
Kinto's recovery plan includes distributing its remaining assets, including $800,000 in Uniswap liquidity, to lenders who helped fund its relaunch. Founder Ramon Recuero has pledged over $130,000 of his own funds to assist victims. Users have been urged to withdraw assets by September 30.
This marks the second failed venture for Recuero, who previously shut down Babylon Finance following a $3.4 million hack in 2022. Following the shutdown announcement, Kinto's token dropped by 81.4% to $0.46.
