/$500,000 worth of ETH stolen from DeFi app through smart contract manipulation

$500,000 worth of ETH stolen from DeFi app through smart contract manipulation

Over the past few weeks, the highly used decentralised financial ecosystem of Ethereum has been going mental. 
The value of cryptocurrencies locked in decentralised finance applications has spiked by more than $1.6 billion.

Over the past few weeks, the highly used decentralised financial ecosystem of Ethereum has been going mental. The value of cryptocurrencies locked in decentralised finance applications has spiked by more than $1.6 billion and at the same time, the number of users who are leveraging these kinds of applications such as Compound has also hit the sky. 
But as all the good news floods into the industry for Ethereum, a hack has allegedly taken place which could have a big impact on the growth of DeFi.
At the end of last week on the 28th of June, reports surfaced throughout the industry with rumours of a hack taking place. At first, the rumours started on telegram according to Stephen Zheng of the Block. 

Apparently someone drained a Balancer Pool made up of WETH and STA and got away with $500k worth of WETH. pic.twitter.com/SKshyDXagi
— Steven (@Dogetoshi) June 28, 2020
Not long after this, the hack was confirmed by Mike McDonald, the co-founder of balancer labs, and the Ethereum-based decentralised platform 1inch. According to a breakdown of the situation by the latter, it seems that Zheng was correct and that and half $1 million worth of Ethereum and other alternative cryptocurrencies were stolen during the attack.
Research from 1inch came to the conclusion that the hacker (hackers?) Used a smart contract in order to manipulate the balancer pool so that it went 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.”

It will be interesting to see how this situation plays out. For more news on this and other crypto updates, keep it with CryptoDaily!