Over $350,000 USD in Ethereum Lost from bZx DeFi Platform in a ‘Complex Transaction’


bZx Exchange, a DeFi based product states it lost over $350,000 USD in ETH following a “malicious attack” or “successful arbitraging” as queries are raised on the overall safety of decentralized finance products. The profiteering party leveraged Compound Finance, wrapped BTC and bZx’s exchange, Fulcrum to successfully carry out the theft.

bZx loses over $350,000 USD in ETH

In a Telegram message on the official bZx channel, co-founder of bZx, Kyle Kistner, informed the community that a “portion of ETH was lost” after an “exploit executed against the smart contract.” Following the announcement, the development team paused all trading on the Fulcrum exchange and have since resumed trading, with the team expected to offer a post-mortem soon.

Well according to the community, the theft can be traced in one transaction on Etherscan.io. The inciting tx is a complex form of transactions that saw the hacker borrow a 10,000 ETH flash loan from dYdX protocol and split the funds into two. One half was sent to Compound Finance as collateral and the other half sent to bZx’s Fulcrum exchange.

Once the amounts were deposited, the hacker borrowed around 112 wrapped BTC (Bitcoin on Ethereum), wBTC, on Compound finance, worth about $1.1 million at the time and shorted wBTC on Fulcrum causing the price to effectively drop. Furthermore the hacker sold the borrowed wBTC on Kyber Uniswap to trigger his short position. Paid back the loan and made off with $350,000 USD in profits.

Total cost of transactions? Only $8.

‘Steps to Maturity for DeFi’

While the lenders and users with funds on the platform remain protected from further hacks, there remains concerns on the overall security on DeFi platforms and the effect of having limited oracles. While bZx denied on a tweet that the hack was caused by relying on Uniswap as an oracle, Chainlink CEO, speaking during the ETHDenver conference discouraged the use of one oracle saying,

“You can’t rely on [only] one oracle connected with an exchange API.”

However, there remains optimistic bZx users who believe this is a learning step for DeFi products to reach maturity. Tim Oligive, CEO of Staked, a company that has ETH stored on bZX, said,

“DeFi is an experiment….I think this is the maturation process for DeFi. You have to get battle-hardened, and if somebody puts out a product that has vulnerabilities, someone else is going to exploit it and that’s part of the system getting stronger.”

 

Get Daily Headlines

Enter Best Email to Get Trending Crypto News & Bitcoin Market Updates

What to Know More?

Join Our Telegram Group to Receive Live Updates on The Latest Blockchain & Crypto News From Your Favorite Projects

Join Our Telegram

Stay Up to Date!

Join us on Twitter to Get The Latest Trading Signals, Blockchain News, and Daily Communication with Crypto Users!

Join Our Twitter

Add comment

E-mail is already registered on the site. Please use the Login form or enter another.

You entered an incorrect username or password

Sorry, you must be logged in to post a comment.
Bitcoin Exchange Guide