With another protocol compromised DeFi is in trouble again
Decentralized Finance DeFi has witnessed a surge in its popularity in recent years. It has only been possible due to its ability to give users control over their assets. However, with another protocol compromised DeFi is probably in trouble again.
KEY TAKEAWAYS
- Despite the surge in DeFi popularity in recent years, various protocols keep getting compromised
- Millions of funds have been lost to hacking due to the presence of even the smallest of vulnerabilities.
As there are issues with other technologies, there are vulnerabilities and risks associated with DeFi protocols. Mostly there is a vulnerability present that allows the hackers to invade space. In the case of LaunchZone’s Bscex SwapX contact, there was a vulnerability that led to the protocol being exploited by the hackers. This resulted in the loss of $7.7 million worth of funds. By exploiting the vulnerability hackers were able to steal this much amount.
Not only that, a month ago around $700,00 worth of funds were stolen from the liquidity pool of LaunchZone. This could have a significant impact on the platform and its users. LaunchZone’s native token, LZ, also saw a decline in value following the exploit, as users lost confidence in the platform’s security.
What has Wallet Authorization got to do with this?
Scam Sniffer a fraud detector platform discovered that a hacker took advantage of a vulnerability in the SwapX contract to exchange users’ funds for low-value tokens. Furthermore, this hacking attempt affects 34,000 wallets. This is a large number of wallets compromised.
While the affected users were notified about revoking 7,838 wallets. There were still 75,586 addresses that remained at risk. Scam Sniffer warned that the attacker’s addresses were still active and could continue to carry out more attacks on users’ funds.
To prevent any further loss Scam Sniffer advised users to revoke their wallet authorization as soon as possible.
The founder of the blockchain security company SlowMist, Yu Xian, commented on the issue. He suggested that the main focus of hackers must be wallet addresses. Specifically, the ones that were at risk of authorization vulnerabilities.
Additionally, a few years ago, there was a vulnerability in a wallet address authorization project. That’s what the hackers must have exploited. They might have targeted users who had not yet revoked their authorization. Thus leaving them more susceptible to the attack.
BNB chain ecosystem has been exposed to several hacks before. Most recently in October, it suffered a loss of $570 million merely due to a bud in the smart contract. To address the issue Binance had to suspend the transactions to address the issue. Nevertheless, the network took steps to combat the issue of DeFi hacks. Which included partnering with law enforcement agencies.
Recently, In March 2023, the Ethereum-based noncustodial lending protocol Euler Finance was hacked for $197 million. However, fortunately, the hacker returned most of the stolen funds and proposed a truce with the DeFi protocol.