Decentralized finance (DeFi) protocol bZx has fallen victim to yet another attack after a bug in its code allowed someone to mint tokens they redeemed for cryptocurrencies on the protocol.
- Co-founder Kyle Kistner told CoinDesk the company noticed something was wrong on Sunday when a single LINK withdrawal led to a $2.6 million drop in the protocol's total value locked (TVL).
- The attack basically centered around the protocol's interest-earning iToken that users receive and redeem for crypto deposited into lending pools.
- Kistner said the attacker exploited a bug that tricked bZx into minting unbacked iTokens subsequently exchanged for cryptocurrencies held in the pools.
- At current spot prices, this works out as a loss of just over $8 million.
- bZx paused the protocol in the aftermath of Sunday's attack so the bug could be patched, and resumed operations hours later.
- Kistner said the decision was taken in consultation with security experts, who had not instructed the company to shut down for any longer.
- He added the $8 million lost had already been debited by the protocol's insurance fund and will be paid out once the bZx community had ratified it.
- The bug managed to remain undetected in two extensive code audits from cybersecurity firms Certik and Peckshield.
- Kistner declined to comment on the identity of the hacker.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.