TL DR Breakdown
- bZx protocol suffers hack worth about $55 million
- The protocol says investigations are still ongoing
- This is the third hack that the protocol will suffer in two years
The decentralized finance sector is one of the most rewarding industries in the financial market. Despite the massive opportunity to make profits, the industry is a high-risk system. This is due to the activities of malicious actors who are involved in hacking and scamming. Striking once again, hackers have breached Ethereum and Binance chain-based protocol, bZx protocol. According to the news reported by SlowMist, a blockchain firm in the crypto sector, the hackers were able to cart away funds amounting to $55 million.
bZx protocol says investigations on the hack are still ongoing
Although the news source mentioned the suspected figure to be at $55 million, bZx has said that it is still conducting an internal investigation to ascertain the extent of the damage. In their tweet about the occurrence, the developers mentioned that the smart contracts on bZx are still safely intact. The tweet also said that the only breach they noticed was the compromised key of the Binance smart chain and Polygon deployments.
Finally, the tweet noted that Ethereum contracts were also not touched. Last year, the decentralized exchange suffered two hacks as it crippled its activities around the high-flying DeFi boom period. During the DeFi boom period, most protocols saw a massive influx of users interested in carrying out transactions without intermediaries or third parties.
The protocol suffered two previous hacks last year
The first exploit occurred in February 2020 after the hackers were able to breach through the protocols system and compromise its margin lending program. During the hacking period, most people turned to DeFi, and the industry was worth about $1 billion.
This singular act caused most people to have a change of heart as regards participation in the sector. In the flash loan attack, the bZx protocol suffered a massive loss. The hackers made away with $366,000 after discovering that 1,300 Wrapped Ethereum was missing from its vault. Today, the value of the stolen Wrapped Ethereum would be worth close to $6 million.
In September, the second hack saw the hackers drain funds worth $8 million from the bZx protocol. The protocol mentioned that the value was about 30% of funds locked on the exchange during the period. Although the funds were paid from their insurance, bZx noted that traders dealing in margin trading were not affected.
With the DeFi sector now bigger than when the first two hacks occurred last year, the hackers could have made away with a huge amount. However, the bZx protocol has mentioned that it would cover the amount stolen from the funds in its DAO treasury.