[NEWS] How a genius hacker made $350,000 exploiting DeFi

[bbc.reporter]

I reckon that they should begin calling their project CeFi hehehe. The problem is not the project itself. The cryptospace should be encouraged to research and build new experimental projects. However, branding it decentralized if it is centralized is a scam.



A A smart trader has exploited various protocols in the decentralized finance(DeFi) space to net a whopping $350,000 in profits.

As Decrypt reported yesterday, a clever set of instructions—all executed in one big transaction—enabled someone to leverage current weaknesses in the DeFi ecosystem for their own gain. By using several decentralized financial tools, and a small dose of price manipulation, they were able to take home a lot of Ethereum.

He specified that a flash loan of 10,000 ETH was probably to blame. Half of it went into lending platform Compound to borrow wrapped BTC (a version of Bitcoin on Ethereum). The rest was collateral for shorting—betting the price will go down—that wBTC on margin trading platform Fulcrum. The account then sold the wBTC on decentralized exchange Uniswap. The price went down, so the hacker cashed out the short at a profit and paid back the initial loan.

But not only has the hacker exposed how a variety of DeFi tools can be used together to net a somewhat unethical profit, he or she has highlighted just how centralized some of these DeFi tools are.

The platform went on to say that the attacker left $600,000 of wrapped Bitcoin on the exchange. And it plans to take this money and distribute it to other users of the exchange.

But, to do so, it will need to use its "admin key."

"There is currently 600k of wBTC collateral left by the attacker. We will be using this to stream interest and exit liquidity to existing iETH holders. This will be done using our admin key. This is an extremely difficult decision for us that we don't take lightly," bZx added.

Essentially this admin key is hard baked into the protocol and allows bZx to control any of the smart contracts—where the funds are kept—as a last resort.

Read in full https://decrypt.co/19612/how-a-genius-hacker-made-350000-exploiting-defi

[GreatArkansas]

Here is one of the tweets of Charlie Lee regarding the tragedy happened to DeFi ecosystem.
Seems like he really don't like DeFi on Ethereum.
What I also think that the attack was cause of dump below 10,000 on Bitcoin and Ethereum and other altcoins bleed much compare to Bitcoin.

[jacafbiz]

People have been saying these Defi are honey pots for hackers, people should no think this is going to be the last of such on Defis. I believe Defis would likely go the way of DEX, most would choose between life and death to survive so try to shift to the middle and shift their strategy to Hybrid -FI instead of Defi because they will like a certain level of control on their platform especially those without ICO funds