- Balancer, a financial system using decentralized technology, experienced a cyber attack leading to a financial setback of nearly $900,000.
- Blockchain security expert Meier Dolev identified an Ethereum address that likely played a role in the cyber attack.
- The breach occurred shortly after Balancer had uncovered a critical flaw in its system, putting at risk assets valued over $5 million.
Just a few days ago, Balancer alerted the public to a significant loophole in its decentralized financial system, asking users to move their assets to safer places. Now, the financial network reports a cyber attack causing an alarming loss of close to $900,000. Balancer confirmed the attack via a message on social media platform X on August 27.
Security professional Meier Dolev unearthed an Ethereum address likely linked to the attacker. After the breach, this address received two big deposits of Dai (DAI) stablecoin. The amounts of $636,807 and $257,520 added up to almost $893,910, raising red flags about the security of Balancer’s system.
The company issued a public notice on X, conceding that even though they’d taken steps to improve security, the compromised liquidity pools were still active. They couldn’t stop them. Balancer told its users to stay away from these compromised pools to prevent further loss of money.
Just last week, Balancer had flagged a severe flaw affecting its advanced liquidity pools. It asked users to move funds away from vulnerable locations, and even put some pools on hold to minimize damage. On the day the flaw was detected, more than $5 million worth of assets were in danger. Two days later, $2.8 million worth of assets were still at risk. In a message on X, Balancer stressed that even though funds in certain corrected pools were now safe, users needed to move their assets to other safe places or withdraw their investments entirely. Pools were marked either as “mitigated” or “at risk” to give users a clear idea of their status.
Back in June, Balancer tried to give its users a better experience by incorporating its system into the Optimism network, also aiming to reduce transaction costs. Despite such efforts, the recent events spotlight how vulnerable even advanced, decentralized systems can be. It’s a wake-up call for both the company and its users to prioritize security in a world increasingly leaning towards digital finance.
How Crypto Networks Still Get Hacked
Hackers use a range of sneaky tricks to break into crypto financial systems and steal money or data. One common method is “phishing,” where they pretend to be someone they’re not to get your password or other important info. Once they’re in, they can take over your account and start transferring money out.
Another trick is exploiting weak spots in a system’s code, especially in smart contracts that automate a lot of actions on these networks. If a hacker finds a loophole in how a smart contract is written, they can manipulate it to siphon off funds.
Some hackers use what’s called a “Sybil attack,” creating many fake accounts to spread misinformation or disrupt the network’s operation. They might also use a “51% attack,” where they control the majority of a network’s computing power to change transaction history and double-spend coins.
Basically, these hackers are like super-smart burglars, finding clever ways to break into digital vaults and grab what they can. This makes it crucial for crypto networks to have rock-solid security measures in place.