We shared an update today. Adding two thoughts on the structure of Stage 2 and rebuilding revenue: 1. Recovery Structure We designed Stage 1 to reduce the number of affected holders immediately and recover as many people as possible fully upfront. This helps us now operationally focus on a way smaller number of people to recover, and who are our priority going forward. So far, Stage 1 has fully recovered 789 wallets. Stage 2 goes live on October 30th and has both a default liquid state (Category A) and an elective equity option at the close of the next priced round (Category B). We designed Category A to produce a simple catch-all, pro-rata structure that can support a variety of liquid contributions (recovered funds, revenue share, prospective partner contributions, and other tokens). It also maximizes flexibility for OLP loss holders, because it does not require holders to speculate and enables incremental liquidity. Holders can redeem their pro-rata share of funds in the Recovery Contract at any time, as funds come in. We designed Category B for eligible holders who prefer an option with upside potential beyond the value of their losses, enabling them to convert a portion of their then-outstanding losses into an equity stake in Ostium Labs. Recovering affected OLP holders continues to be our number one priority. The split between A and B exists to enable holders to prioritize what they prefer in amounts they determine: cash or participation in potential longer-term upside. Splitting these options will lead to a distribution of resources over time that better reflects OLP loss holder preference. For those who do not wish to elect equity, every dollar converted into equity at the next priced round by other OLP loss holders still decreases the total amount of outstanding losses that would otherwise be covered by liquid sources (e.g. revenue, recovered funds). This means that the same cash covers a larger share of the remaining losses, allowing those losses to be recovered more rapidly, all else equal. 2. Rebuilding revenue The elephant in the room: how do we bring back revenue? Even before the exploit, we were actively pivoting strategy. A big focus of our previous user acquisition was growing the absolute user count as much as possible. That was the wrong approach. 90% of protocol revenue came from the cohort of users who drove significant volume and most valued what differentiates our product: liquidity in size. That is Ostium’s ideal customer profile, and we will go full force on acquiring these users going forward. That means a stronger focus on upmarket, rather than downmarket. Enterprises, smaller institutions, and protail are the best fit for our product. They care about execution, predictable holding costs, access to underlying market liquidity, and the ability to one-shot large trades. This is precisely where Ostium’s edge lies. Gateway was designed with exactly that in mind. It is a significant upgrade to the existing Ostium trading architecture. For the first time, we are embedding into the trading engine cross-margining, aggregated positions, enhanced security limits, an enterprise-grade API, and a privacy-first design. These design decisions are informed by our conversations with early design partners and will continue to be as Gateway nears production. We are focusing on this strategy because we believe it objectively has the highest probability of success. We believe it will work and won’t stop until it does.

Status Update: The forensic investigation remains ongoing. We are working closely with law enforcement and leading cybersecurity experts. Our team of experts continues to trace funds and actively coordinate with exchanges, bridges, and stablecoin issuers. The trading contracts were and remain frozen to contain the incident. Public communications will be shared with a minimum of 24 hours notice prior to any unfreezing of smart contracts. At present, positions remain open. When trading resumes, traders will again be able to manage or close them. We will share updates as we are able to responsibly over the coming days, including a technical post-mortem and outline of the path forward towards protocol restoration. Please trust only official channels. We are not circulating recovery forms and will never ask for your keys, seed phrase, or funds. The support we have received over the past 36 hours has been extraordinary. To the partners, friends, security experts, and industry peers who have helped us in this: thank you. More to come.

This morning, between 14:18–14:23 UTC, Ostium experienced a security issue leading to a loss of funds from the public OLP vault. Our team identified the issue within minutes and immediately began taking steps to contain it, including coordinating to pause trading contracts within the hour. We are working closely with relevant law enforcement authorities, SEAL 911, and third-party cybersecurity experts. No founder ever wants to deliver an update like this. We recognize the responsibility that comes with building infrastructure that people choose to use and trust. We take that responsibility seriously, and our focus is on resolution and responding with transparency and accuracy. To the stablecoin issuers, bridges, protocols, and security partners who have moved quickly to assist us: thank you for your continued support. We will continue to provide updates as they arise.