DFX Finance (DFX), a decentralized finance (DeFi) protocol, came to the fore with a hack attack. In the said attack, $4.3 million was stolen. Also, the platform’s altcoin project suffered a decline. Here are the details…
DFX Finance has been hacked
DFX Finance, the protocol that provides a decentralized exchange service for fiat-pegged stablecoins, has reported that it has been hacked. According to security researchers’ estimates, an anonymous attacker first stole $7.5 million from DFX. The DFX Finance team has acknowledged the vulnerability. He said he paused all his smart contracts to get the problem under control. He stated that they became aware of the attack within 20-30 minutes.
The incident appears to have taken place with a flash loan attack that allowed the hacker to withdraw money from DFX. Flash loan is a feature where large amounts of cryptocurrencies can be borrowed unsecured only if these funds are returned in the same transaction. Of the stolen assets, the hacker transferred 2,963 ETH ($3.8 million) and about $500,000 in stablecoins. In other words, he transferred $4.3 million in assets to his wallet.
Altcoin price crashes
The attacker borrowed stablecoins from DFX Finance during the attack. It then deposited them back into DFX’s liquidity pools with a “callback function” that bypassed flash credit checks. With the attack, DFX’s liquidity pool tokens were disposed of via multiple flash credits. Flash loans are intended for arbitrage trading and increasing capital efficiency. However, hackers regularly abused them to exploit certain vulnerabilities.
Meanwhile, DFX Finance’s DFX token fell 32.4 percent to $0.17. The cryptocurrency was changing hands at $0.29 before the news of the hack. It fell as low as $0.155 on a daily basis. Now it is trading at $0.173.
Meanwhile, as Cryptokoin.com reported, DFX Finance had raised $5 million in a funding round led by Polychain Capital and True Ventures. DFX Finance is a crypto FX trading protocol. It is essentially a DeFi protocol for FX trading. The company’s backers include Polychain Capital and Hex Capital.
DeFi attacks on the rise
DeFi attacks continue to pile up as we enter the final month of 2022. The value lost in the attacks this year exceeded $3 billion. Among attackers, this year’s “popular choice” appears to be cross-chain bridges. A total of $2 billion was lost in attacks on these bridges this year. Blockchain analytics firm Chainalysis has pointed to a 60 percent increase in crypto attacks. He reported that this increase is mostly related to the field of DeFi. The firm has also observed that the activity of crypto “mixers” has reached an all-time high.