Connect with us

Social

Assessing what went behind the latest $600k DeFi exploit

Published

on

Source: Pexels

The Li Finance protocol was recently compromised with a hack of $600,000. Reportedly, 29 wallets were affected. However, the bug was later fixed. Well, this has added more pain to the increasing list of DeFi hacks.

The Li project’s bug was exploited at 02:51 AM (+ UTC) on 20 March 2022. Among the 10 stolen currencies were USD Coin (USDC), Polygon (MATIC), Tether (USDT), and AAVE (AAVE).

Is DeFi safe?

The Li Finance hacking is understandably a new concern for DeFi uses. The number of DeFi exploits has been skyrocketing since the start of 2021.

In the chart below, one can see the increasing crimes in the crypto sphere with more than $3.2 billion stolen in around 250 thefts. Notably, $2.3 billion of the amount was stolen on the DeFi platforms. There was a 6x increase in DeFi centric attacks in 2021 as compared to 2020.

For these rising DeFi exploits, Chainalysis cites the main reason to be the reliance of DeFi platforms on open-source software.

 

Chainalysis’s The 2022 Crypto Crime Report

Furthermore, price oracles is another issue cited by Chainalysis.

Secure but slow oracles are vulnerable to arbitrage; fast but insecure oracles are vulnerable to price manipulation. The latter type often leads to flash loan attacks, which extracted a massive $364 million from DeFi platforms in 2021.

Also, Chainalysis noted,

In 2021, code exploits and flash loan attacks—a type of exploit involving price manipulation—accounted for a near-majority of total value stolen across all services at 49.8%. And when examining only hacks on DeFi platforms, that figure increases to 69.3%.

Code audits were thought to provide a potential solution for the thefts. However, according to Chainalysis, “audits aren’t infallible. Nearly 30% of code exploits occurred on platforms audited within the last year, as well as a surprising 73% of flash loan attacks.”

Read the best crypto stories of the day in less than 5 minutes

Subscribe to get it daily in your inbox.


Please select your Email Preferences.

Kanav is a journalist at AMBCrypto. He has a Masters in Media and International Conflict and is interested in areas of digital society, crypto developments in the political sphere and the socio-cultural impact of a crypto-society.

Click to comment

Leave a Reply

Your email address will not be published.

Disclaimer: AMBCrypto's content is meant to be informational in nature and should not be interpreted as investment advice. Trading, buying or selling cryptocurrencies should be considered a high-risk investment and every reader is advised to do their own research before making any decisions.