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The price of Balance Coin, an algorithmic stablecoin and the native token of the DeFi project Balance Protocol, fell by more than 99% after an attack on the protocol. The asset is currently trading at around $0.0024, down from $0.9954 before the incident.
Security experts at SlowMist said the attacker exploited an abnormally low Binance Bitcoin (BTCB) price provided by a price oracle.
This allowed the attacker to liquidate collateral in several BTCB vaults, even though those positions should not have been eligible for liquidation at the correct price. The attacker then swapped the extracted assets and profited from the price difference.
The entire scheme was carried out in a single transaction. The attacker exploited the lack of protection against incorrect prices and the absence of a liquidation delay in a system built on the Maker model.
Losses approach $1 million
Blockchain security firm PeckShield estimated that 42DAO suffered losses of approximately $915,000. The organization is responsible for governing Balance Protocol, a DeFi platform that issues the U.S. dollar-pegged Balance Coin stablecoin.
According to the project’s documentation, the stablecoin is primarily backed by Bitcoin Cash.
The incident adds to the growing list of attacks on DeFi protocols this year. Hackers continue to exploit smart contract flaws, cross-chain bridge vulnerabilities and compromised administrative controls to drain funds from blockchain projects.
The dark side of AI
Hackers are becoming increasingly inventive and are more often combining several vulnerabilities instead of relying on a single obvious flaw. They manipulate price oracle data, bundle multiple operations into one transaction and use automated tools to identify weaknesses in smart contracts before developers do.
AI is becoming an additional tool for attackers. It can help them analyze code faster, identify potential vulnerabilities and develop attack scenarios. At the same time, security specialists are also using AI, gradually turning the confrontation between developers and hackers into a technological arms race.
Tokenized stocks, meanwhile, are currently gaining popularity.
This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.
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