Deus Finance loses over $6M after stablecoin exploit
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Deus Finance, a decentralized finance (DeFi) protocol, has lost over $6M because of a security breach on its DEI stablecoin. The hacker behind the breach exploited a flaw in the BNB Smart Chain on May 5. This exploit comes amid a significant increase in hacking attacks across the DeFi space this year.
Deus Finance loses over $6M after stablecoin hack
The PeckShield blockchain security company reported the exploit. The company noted that an exploit on the BNB Chain was the cause of the hack. The exploit resulted in a loss of over $1.3 million.
The hacker behind the attack also targeted the Arbitrum network, with ARB/ETH deployments leading to more than $5 million loss. Users on Twitter have said that the token contract had a basic implementation error that was the main cause of this exploit.
The DeFi protocol has already confirmed the exploit on its network, and it paused all smart contracts. It also burned DEI tokens to ensure no further damage was seen on the protocol. The protocol has also said that it was working on a recovery plan.
“We are currently in the process of comprehending the actual backing of DEI tokens. To achieve this, snapshots of all DEI balances are taken before the tokens are burnt. After evaluating all balances, we will formulate a comprehensive recovery and redemption plan,” a statement from the DeFi protocol said.
DEI is the token used as a collateral mechanism for third-party products created on the Fantom blockchain. The stablecoin has since lost its peg, dropping by more than 60% in the past few days. At the time of writing, DEI was trading at $0.334, according to data from CoinGecko. It is not the first time that the stablecoin has lost its peg, as it also fell below the $1 value after the collapse of Terra.
Deus Finance has been previously exploited
The DeFi space is usually vulnerable to hacking exploits. Hackers are increasingly targeting the industry and looking for exploitable vulnerabilities because of the massive transaction volumes processed on DeFi protocols.
It is not the first time that Deus Finance has been tacked. The protocol has suffered two other attacks previously. It lost $13.4 million in one attack and another $3 million in another attack.
Each time the protocol has been exploited, the hackers have used different techniques. In one of the instances, the attackers used a flash loan attack, and they manipulated the data reading format used by the DEUS smart contracts from liquidity pols. The attackers later change the values, increase the loan amount and earn significant profits after they repay the loan.
The hackers behind the exploit secured a loan of $143 million in a flash loan attack, after which they made profits of $13.4 million. More losses were anticipated to have occurred because of the exploit. A report by PeckShield at the time said that the hackers laundered the stolen funds using the Tornado Cash crypto mixer.
