Zilliqa Legacy Network Retirement: Migration and Compensation Progress

Market Trends

25 October 2026

The situation after the retirement of Zilliqa's legacy network can be viewed in two parts: migration is largely complete, but compensation is still on the way. Exchange-custodied ZIL has been migrated 1:1 to EVM addresses via a hard fork, requiring no action from users. Self-custody users need to use Zilliqa's official zero-knowledge proof tool to migrate on their own, and the tool has been audited. Regarding compensation, Zilliqa's official proposal is to mint new ZIL to compensate affected users, but as of the latest official updates, the specific compensation proposal has not yet been posted to the governance forum, and no vote has taken place.

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Migration: Exchange Users Done, Self-Custody Users Must Act

The incident began with a signature flaw in the Zilliqa Ledger application. When generating Schnorr signatures, the application fixed the high 64 bits of the nonce to zero, reducing randomness and allowing an attacker to reconstruct a private key using multiple public signatures from the same account. This flaw existed in all versions released between 2019 and 2026. Zilliqa disabled legacy transactions on July 20, 2026, and ultimately confirmed that at least 683,130,969.66 ZIL was stolen, affecting 6,772 exposed accounts, 51 of which were drained.

Because exposed private keys cannot be "sanitized" by patching software, Zilliqa chose to retire the legacy Schnorr transaction system and migrate all balances to EVM-compatible addresses. Exchange-custodied users were the most convenient group: migration was completed through a protocol-level hard fork. Exchanges provided their own EVM addresses, and Zilliqa reassigned old address balances to them during the fork. Users did not need to take any action. The first hard fork was executed on September 2, 2026, covering platforms such as KuCoin, MEXC, and Binance US. A second batch followed in late September, with Binance, Bitvavo, MEXC, and others completing migration and resuming ZIL deposits and withdrawals on the EVM network. Binance explicitly stated that spot, margin, futures, and Earn products were unaffected during the migration, and deposits/withdrawals on the old network were permanently stopped after migration was completed.

Self-custody users do not have an exchange to handle this for them. They need to use the zero-knowledge proof migration tool developed by Zilliqa. The tool's design allows users to prove ownership from the parent node one level up in the BIP-32 derivation tree, rather than using leaf private keys that may have been leaked. This way, even if a leaf private key is stolen, an attacker cannot forge a migration proof. Hacken audited the tool before its release and found and fixed several issues, including a missing EIP-55 checksum confirmation step for the destination address (a typo would result in permanent and unrecoverable loss of funds), incorrect trimming of leading/trailing spaces from BIP-39 passphrases, and support only for Ledger's hardened derivation path, which prevented standard BIP-44 wallet users from generating proofs. The final report recorded 20 findings: 18 resolved, 1 accepted (the deposit entry of the custody contract is unprotected, meaning funds deposited by arbitrary callers would be permanently burned), and 1 mitigated.

The tool has a clear coverage boundary: the custody contract only handles native ZIL; the derivation scheme used by legacy multisig holders is not within the circuit's coverage; wallets that have never exported a seed phrase or extended key cannot generate the required witness. If your ZIL is held in such wallets, the official tool cannot help you, and you should monitor whether Zilliqa expands its support scope later.

Compensation: Direction Set, Specific Proposal and Vote Not Yet Happened

Cross-border legal recovery of stolen funds is a realistic option, but Zilliqa itself admitted in its official update on September 1 that this process is "slow and uncertain" and that it would be unfair to ask affected users to wait solely for legal outcomes.

The parallel approach proposed by the team is: use a community vote to decide whether to adjust the ZIL token economic model and mint new tokens to compensate affected users. Zilliqa emphasized that this is a matter for the community to decide, not a unilateral action by the team, because it changes token supply and affects all ZIL holders. The team promised that a complete proposal (including mechanism, amount, and eligibility criteria) would be published on gov.zilliqa.com.

But there is a key time gap to clarify here. The September 1 update said the vote was "being prepared" and the full proposal would be published "when ready." By mid-October, when Hacken published its audit report, no published compensation proposal or voting record appeared in search results. Hacken's audit report also did not mention progress on the compensation mechanism, focusing only on the migration tool itself. This means that as of verifiable public information, compensation remains at the stage of "direction announced, mechanism not yet implemented." Affected users should regularly check gov.zilliqa.com rather than relying on third-party tutorials or community rumors to determine how much they "should receive."

Two Different Kinds of "Recovery" to Distinguish

Losses from exchange-operated wallets and losses from ordinary users follow different processing paths. Zilliqa's exchange FAQ explicitly states: for verified exchange-controlled operational wallets that directly lost ZIL due to the vulnerability, Zilliqa will restore the funds by minting additional ZIL and crediting it to the EVM address provided by the exchange, provided the agreed verification and audit process is completed. However, this recovery path only applies to exchange operational wallets. The migration and recovery process for self-custody retail users was still being finalized at that time.

In other words, if you held ZIL on an exchange, your balance migration has already been handled by the exchange and Zilliqa. If you held ZIL in a self-custody wallet and your private key was not exposed, the migration tool can help you move to EVM. If you held ZIL in a self-custody wallet and your private key was exposed and funds were stolen, the compensation mechanism is the only way to recover, and it has not yet been implemented.

What to Watch Next

The specific observation points are not "whether the ZIL price will rise," but two verifiable events: whether a formal compensation proposal appears on gov.zilliqa.com, and whether that proposal goes to a vote and passes. If a proposal is published, things to check include: how compensation eligibility is determined (whether it is limited to on-chain verifiable stolen addresses), the amount of new issuance and its dilution effect on existing holders, and the claim deadline and verification method. Before a proposal is officially published, any message claiming that "compensation claims are open" should be treated as suspicious. Zilliqa has explicitly warned on the incident page that any recovery tool or link sent via private message should be considered hostile.

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