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Avalanche’s DEX loses $12 million in hack; are AVAX holders next to be snowbound

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  • Defrost Finance gets hacked and funds worth $12 million get stolen
  • Avalanche’s TVL and revenue generated declines

A DEX on the Avalanche network, known as Defrost Finance, was compromised by an attack from a hacker. According to data provided by PeckShield Inc, a crypto security analytics firm, the attacker was able to get away with $12 million.


Read Avalanche’s Price Prediction 2023-2024


The unfolding of it all…

The attacker managed to add a fake token as collateral, then proceeded to use a fake price oracle. A price oracle is a source of price data streamed onto a blockchain. Using these tools, the attacker managed to liquidate $12 million worth of user funds.

This was not the first attack that had occurred on Defrost Finance. On 23 December, Defrost Finance was hacked and the hacker was able to use flash loans (which is an uncollateralized loans) to steal funds worth $173,000. It is uncertain whether these attacks were carried out by the same or different hackers.

The Defrost Finance team was willing to negotiate with the hacker. In a recent tweet, the team at Defrost Finance announced that they will be willing to pay up to 20% of the funds to the hacker. This was if the hacker manages to give back the remaining funds to Defrost Finance.

The current state of Avalanche

These concurrent attacks happening in Avalanche’s DeFi ecosystem could affect the overall TVL collected by Avalanche. According to DefiLlama, Avalanche’s TVL reduced from $903 million to $787.03 million over the last month.

Source: Defi Llama

Furthermore, the revenue generated by Avalanche declined as well. Avalanche’s revenue fell by 41.3% in the last 30 days, based on token terminal’s data. At the time of writing, the cumulative revenue generated by Avalanche stood at $3.8 million.


     A 38.38x hike on the cards if AVAX hits ETH’s market cap?


Avalanche wasn’t able to fare well in terms of the NFT sector as well.

According to data provided by AVAXNFTSTATS, it was observed that the top 5 NFT collections on the NFT network witnessed a massive decline in terms of volume. Furthermore, popular AVAX NFT collections such as chikn and FarmLand started to lose interest from NFT investors.

Source: AVAXNFTSTATS

The attacks on protocols in Avalanche’s ecosystem coupled with the declining interest in its NFTs could impact Avalanche’s growth negatively in the near future.

At the time of writing, $AVAX was trading at $11.69 and its price had increased by 0.45% in the last 24 hours.

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Saman Waris works as a News Editor at AMBCrypto. She has always been fascinated by how the tides of finance and technology shape communities across demographics. Cryptocurrencies are of particular interest to Saman, with much of her writing centered around understanding how ideas like Momentum and Greater Fool theories apply to altcoins, specifically, memecoins. A graduate in history, Saman worked the sports beat before diving into crypto. Prior to joining AMBCrypto 2 years ago, Saman was a News Editor at Sportskeeda. This was preceded by her stint as Editor-in-Chief at EssentiallySports.
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