One Hacker drained $500K in Ethereum and other altcoins from DeFi apps as the budding decentralized finance ecosystem of Ethereum has gone parabolic through the course of the previous weeks. In the following Ethereum news, we find out more.
The value of digital assets locked in DeFi applications experienced growth to $1.65 billion, which is 65% higher than just 12 days ago. At the same time, the number of users leveraging apps like Compound, Maker, and Synthetrix has jumped to the sky. But, a supposed hack was performed that will probably slow the growth of DeFi temporarily.
On Sunday afternoon, the spreading of reports that a hacker drained $500K in Ethereum through social media started. The information was spread firstly through Telegram, according to Steven Zheng of The Block. An admin of a Telegram group noticed a certain issue with Balancer, the DeFi apps protocol that has its focus on facilitating token swaps. Zheng wrote:
“Apparently someone drained a Balancer Pool made up of WETH and STA and got away with $500k worth of WETH.”
Some hours after the tweet of Zheng, the hack was confirmed by 1inch, the Ethereum-based decentralized exchange, and the co-founder of Balancer Labs, Mike McDonald. Balancer Labs is behind Balancer’s development, an Ethereum-based protocol. According to a detailed breakdown of the hack by1inch, Zhang was right: something over $500,000 worth of ethereum and other cryptocurrencies were stolen during this hack. The research conducted by the exchange found that the hacker used a smart contract to manipulate the Balancer Pool in order to push it into debt:
“These funds were used to swap WETH to STA token back and forth 24 times which drained STA balance from the pool. […] Every time the attacker swapped WETH to STA, the Balancer Pool received 1% less STA than was expected.”
Hack attacks are not the only danger that is posed to DeFi. The well-known investor at Digital Currency Group, Larry Sukernik stated that DeFi products are overly complicated for their own good.
“A very high IQ can be a headwind to building massively successful products. You get people with a big brains that need to be put to work. And when they’re put to work, the result is often a complex, brilliant, but massively unusable product. Lots of that in DeFi now.”
DC Forecasts is a leader in many crypto news categories, striving for the highest journalistic standards and abiding by a strict set of editorial policies. If you are interested to offer your expertise or contribute to our news website, feel free to contact us at [email protected]