A hacker exploited decentralized finance (DeFi) platform Euler Finance early Monday morning and stole around $200 million worth of cryptocurrency, according to blockchain security firm SlowMist.
Euler Finance, an Ethereum (ETH) based non-custodial lending protocol, admitted the hack on Monday, noting that it was working with law enforcement and independent auditors and security firms.
Explain slow fog,
“The attacker used flash loans to deposit funds and then leveraged them twice to trigger liquidation logic, donating the funds to the reserve address and performing a self-liquidation to collect any remaining assets.”
The blockchain security firm notes that the hacker donated funds to the reserve address without being subject to liquidity control, which “created a mechanism that could directly trigger a soft settlement.”
“When the soft liquidation logic was triggered by high leverage, the value of the yield increased, allowing the liquidator to obtain most of the collateral funds from the liquidated user’s account by transferring only a portion of the liabilities.
Since the value of the collateral funds exceeded the value of the liabilities (which were only partially transferred due to the soft liquidation), the liquidator was able to successfully pass its checkLiquidity and withdraw the obtained funds.
According lookonchainEuler lost approximately 96,833 ETH, worth around $166 million at the time of writing, and $34 million of the USD-pegged DAI stablecoin.
In its 2023 Crypto Crime Report, blockchain data platform Chainalysis notes that hackers stole a total of $3.8 billion from cryptocurrency companies last year, the highest annual total ever. Hackers took the vast majority of that total by targeting DeFi protocols.
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