Polygon Labs weighs hard fork to recover assets after Polymarket and Binance hacks

• A hard fork proposed by the Polygon Labs team would recover POL associated with the Polymarket and Binance hacks.
• 23.86 million POL linked to Polymarket will move to a recovery wallet under the hard fork. Another 46.63 million POL from Binance will also be transferred there.
• Discussion of the proposal is set for Thursday. Implementation would take roughly two weeks if approval is granted.

A hard fork of the Polygon Proof-of-Stake (PoS) mainnet is central to Polygon Labs’ latest improvement proposal. It seeks to recover assets associated with the Polymarket and Binance hacks. Under the proposal, validators would be required to move POL tokens held at the five attacker-controlled addresses to verified recovery addresses. This would be an exceptional, one-off governance intervention to reverse the effects of the hacks.

Hard fork proposal targets return of blocked assets 

Roughly 28 million POL on Polygon PoS were identified in Polymarket’s final investigation report into its October 30 security incident. Of that amount, 24 million POL were subsequently frozen on request. The report on the $6.3 billion Binance hack likewise recorded a transfer of over 46 million POL tokens from Binance’s own hot wallet. Across five attacker-controlled addresses, the holdings total 70.49 million native POL. Polygon’s block producers have placed those addresses on the Bor transaction block list.

Blocking the assets provides only a temporary safeguard. Each block producer loads the Bor list at startup, meaning updates depend on restarts or span rotations. Entries also have no automatic expiry, and the filter applies only to certain transaction types. Attackers have tested high-fee transactions to circumvent these limits. They have also approached validators, offering lucrative payments in return for unblocking the funds.

With no route to a refund, this fragile mechanism leaves tens of millions of POL locked indefinitely. A Polygon Labs team member has therefore proposed the exceptional step of a PoS mainnet hard fork under Section 5 of the Specification and the Rationale.

Wednesday’s Polygon Protocol Governance Call is due to hear the Polygon Improvement Proposal (PIP). Subject to approval, implementation is expected to take roughly two weeks.

Moving balances without private keys, as envisaged in the PIP, requires a consensus change. A hard fork is therefore the only technical route. The proposers stress that the measure is not a general-purpose tool for freezing or recovering assets and should not become routine. 

Six verifiable conditions are set out in the PIP to support the hard fork: public acknowledgement by the victims, universal application of the blocklist, a substantial amount, clear on-chain tracing to reputable parties, a request for the remedy from the victims themselves, and no competing claims following public disclosure.

The proposers rejected several alternatives to a hard fork after considering them. These included keeping the funds locked, depending on the attackers’ cooperation and developing a permanent protocol-level recovery mechanism.