It's funny I was saying that DEFI hacks of 30 million are going unreported and now we get a loss of over $180 million for Beanstalk Farms and still no one cares.
We are now in a clown world where $200 million can disappear in a matter of moments and no one is willing to accept that this is a fuck up, it's all chalked off to the cost of innovation which is such a cop-out in my opinion.
For those of you who need a summary Beanstalk Farms, a DEFI application on Ethereum that focus on stablecoin, was exploited. A hacker has drained $80 million. As a result, the native cryptocurrency (BEAN) plummeted by more than 80% in minutes and hit a depth of 88% in losses.
How the attack was achieved
Beanstalk Farms, DEFI uses a credit-based stablecoin that had a total loss of $182 million in USD value comprising of several tokens and Ethereum in a massive security breach. The flash loan attack, which is very common for lending protocols drained the stablecoin’s total reserve and triggered a collapse.
Two suspicious governance proposals, BIP-18 and BIP-19, were issued by the exploiter on April 16, 2022.
The proposals coupled with a security breach were used to maliciously drain BEAN’s reserves or so we are told, the possibility of a rug pull still lingers in my opinion.
The attacker took $1 billion in a flash loan from the Aave protocol in DAI, USDC and USDT. Once the loan was approved, it took control of 67% of the protocol’s governance and started approving their own proposals.
The proposals asked Beanstalk to donate funds to Ukraine. However, it was accompanied by a malicious rider that ultimately drained funds from Beanstalk’s reserves.
Bean Price
The bean price tanked from $1 which is meant to be its pegged price to around $0.10 but recovered to $0.16 cents and in bitcoin terms, it was around 2600 sats to 460 sats. It will be a long time before they can recover that liquidity if anyone still trusts them and if no one comes to bail them out those LPs will have to accept those losses.
This just shows you the risk in algorithmically backed stablecoins and why the hype around them only creates new honeypots to be exploited.
The six-figure Defi loss has left the protocol with empty reserves. And there is a low likelihood of users’ funds being reinstated with zero financial backing for this protocol.
I will keep documenting these hacks on my blog as a grim reminder of how web 3, NFT, tokenisation, metaverse, and all these narratives are costing ordinary people millions.
Sources:
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