Lack of liquidity mitigated damages to BonqDAO exploit: Report
In line with blockchain safety agency CertiK, the harm precipitated to decentralized protocol BonqDAO on Feb. 1 could have been a lot lower than initially thought.
As instructed by CertiK, the attacker first borrowed 100 million BEUR, a euro-pegged stablecoin, with lower than $1,000 in collateral because of a scarcity of controls on the collateralization ratio. If customers set the parameter to zero, then the platform defaults to returning the “most worth of uint256,” permitting an astronomical sum of loans to be issued.
Nonetheless, CertiK mentioned that regardless of the attacker borrowing 100 million BEUR (round $120 million on the time of assault), the hacker solely managed to withdraw round $1 million because of a scarcity of liquidity on the platform. Beforehand, blockchain safety corporations equivalent to PeckSheild said that round $120 million was misplaced in the course of the assault.
Bonq is a fork of Liquity Protocol, which, just like that blockchain, makes use of Troves to characterize remoted debt positions. Nonetheless, Bonq reportedly applied a Neighborhood Liquidation Characteristic the place 45 Troves with BEUR publicity had been liquidated because of the incident. In line with CertiK, the assault additionally impacted Troves containing roughly 110 million of AllianceBlock’s ALBT tokens. That mentioned, not one of the AllianceBlock sensible contracts had been breached in the course of the incident, and the challenge has mentioned it should airdrop new tokens to compensate affected holders.
Bonq protocol was uncovered to an oracle hack, the place exploiter elevated the ALBT worth and minted giant quantities of BEUR. The BEUR was then swapped for different tokens on Uniswap. Then, the value was decreased to virtually zero, which triggered the liquidation of ALBT troves.
— BonqDAO (@BonqDAO) February 1, 2023
Though a scarcity of liquidity seems to have mitigated damages to BonqDAO in the course of the incidents, others weren’t so fortunate. On Oct. 12, decentralized finance protocol Mango Markets initially misplaced $116 million after hacker Avraham Eisenberg manipulated the value of MNGO, driving it up 30x by way of monumental perpetual future contracts inside a brief interval. This was doable as a result of a comparatively small preliminary capital was required to control MNGO because of low liquidity.
Associated: How low liquidity led to Mango Markets shedding over $116 million
Afterward, Eisenberg acquired a mortgage for $116 million utilizing $423 million of his inflated MNGO holdings as collateral and siphoned funds from the platform. On Dec. 28, Eisenberg was arrested in Puerto Rico on expenses of commodities manipulation and commodities fraud.
