Decentralized finance (DeFi) platform Balancer, known for its automated market maker mechanism, has confirmed an exploit that resulted in a loss of nearly $900,000.
The incident occurred shortly after the protocol disclosed a vulnerability affecting multiple pools, adding to concerns in the DeFi space.
This breach, unveiled on August 27 via a post on X (formerly Twitter), has been linked to a specific Ethereum address, purportedly belonging to the attacker.
Notably, Meier Dolev, a blockchain security expert, revealed the identity of this address.
Following the attack, the malicious entity received two separate transfers of the stablecoin Dai (DAI), totaling $636,812 and $257,527.
Consequently, the balance in the attacker’s address escalated to an alarming $893,978.
Acknowledging the situation, Balancer’s team addressed the exploit and its ongoing consequences. Despite implementing significant risk-reducing measures over recent days, the affected pools were not completely paused due to inherent limitations.
The protocol emphasized that users who engaged with these affected liquidity pools must take immediate action to minimize the risk of further exploitation.
The recommended course of action is to withdraw funds from these pools.
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The underlying issue was first brought to light on August 22 when Balancer alerted users to a critical vulnerability in its boosted pools.
A subsequent effort to mitigate potential losses involved encouraging users to withdraw funds and temporarily halting pool activities.
This vulnerability extended its impact across various blockchain networks, including Ethereum, Polygon, Arbitrum, Optimism, Avalanche, Gnosis, Fantom, and zkEVM.
Initially, only a fraction of Balancer’s total assets (1.4%) were deemed susceptible on the day of the vulnerability’s discovery, amounting to over $5 million in asset exposure.
By August 24, the at-risk assets had decreased, but still accounted for $2.8 million, approximately 0.42% of the total value locked in the platform. Balancer’s team shared essential insights with their users through X:
“While we believe that funds in the mitigated pools (identified as ‘mitigated’) are secure, we strongly recommend transitioning to safer pools promptly or making withdrawals.
Pools that could not be effectively mitigated are labeled as ‘at risk.’ For those participating in these pools, we advise immediate exit.”
Balancer was initially deployed on the Optimism network in June of the previous year, aiming to enhance user experience and minimize transaction fees within the DeFi landscape.
However, this incident underscores the persistent challenges and risks faced by decentralized financial protocols and the broader crypto community.
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