By Hannah Perez
The price of the Zabu Finance (ZABU) token fell after the hack, though it has now recovered significantly as the team reports compensation plans.
Avalanche-based decentralized finance (DeFi) platform Zabu Finance
recently suffered a hacking attack that caused losses in excess of USD $3 million.
The protocol’s team reported the attack in a tweet on Saturday, saying that its Spore Pool was possibly under hack. At the time, the developers of Zabu Finance requested help from decentralized exchanges (DEX) Avalanche , Pangolin, and Trader Joe
. The platform later confirmed the unfortunate events on Sunday.
We’ve been exploited today. What happened?
– Zabu Finance ???? (@zabufinance) September 12, 2021
The attack on the Zabu Finance platform is the first of this magnitude suffered by an Avalanche-based DeFi
As explained by the developers behind the platform, the hack was triggered when attackers exploited a vulnerability to mint an oversupply of tokens. This massive token
deletion ended up reducing the price of the protocol’s native cryptocurrency, ZABU, to zero.
First major attack on an Avalanche DeFi
According to an investigation by Zabu Finance, the mystery hacker targeted the protocol’s “Transfer Tax” mechanism to mint tokens. In this way, the attacker interacted with the protocol’s contract to successfully extract 4.5 billion tokens from ZABU. Then, he sent everything to the DEX Pangolin and Trader Joe
, stealing about $600,000 worth of the currency.
The total loss was around USD $3.2 million in various tokens, including 402.9 WETH, 23,157 WAVAX, 21,501 PNG, 106,848 AVE, 361,267 USDT and 23,958.93 JOE, according to block explorer data cited by Cointelegraph
As part of the
response, the team stated the intention to return tokens to investors based on their pre- and post-hack balances. Zabu Finance also set rewards to zero so that users could withdraw funds immediately after the announcement about the exploit.
That way, people who lost money before the hack will receive distributed tokens and continue to support the protocol if they wish. For the late buyer (after the hack), they can also participate in Farm V2 by betting what they bought in a Zabu V1 Staking Pool.
The developer team also burned – took out of circulation – the remaining 93.12 million Zabu tokens, worth $360,000 USD. They also commented that the refunding of the money could take a while, and did not set a timeline for the move.
ZABU Price Plummets, Now Recovering
While DeFi analysis provider DeFiprime and others in the ecosystem pointed out that this was likely the “first major exploit” into a DeFi from AvalancheDeFi, according to the security firm, PeckShield, “the same bug happened many times before.”
Over the weekend after the event, the price of the ZABU token slid to zero from approximately USD$0.0047, though by the time of editing the coin has recovered significantly. According to data from Coinmarketcap, the price of ZABU has risen nearly 100% in the last 24 hours and is trading at USD$0.000075.
It is possible that the price increase is due to the quick response the project has had after the hack. This Monday, Zabu Finance announced its first non fungible token (NFT) project whose proceeds will go towards compensating those users who were affected by the recent hack. It also announced the launch of an improved version of the protocol.
Zabu Finance is just one of many victims of DeFi hacks this year. According to CipherTrace, DeFi-related attacks increased by 270% this year, causing losses of USD $474 million to users in the first few months of 2021 alone.
Version by Hannah Estefania Perez / DiarioBitcoin
Image by Unsplash