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The attacker exploited unvalidated call data, resulting in 608 ETH being stolen.
The hacker holds about $4.3 million in various crypto assets in their Ethereum wallet.
The rise of cryptocurrencies in recent years has resulted in the emergence of novel financial services that use the potential of digital assets. Crypto-backed loans, which allow individuals to unlock the value of their cryptocurrencies without having to sell them, are one such business that is growing popularity.
These loans are made possible through lending platforms, which connect borrowers and lenders in a decentralized fashion. This article delves into the concept of crypto-backed loans, their advantages, and how lending platforms are changing the financial environment.
Understanding Bitcoin-Backed Loans
Crypto-backed loans are a type of borrowing in which individuals offer their digital assets as collateral to secure a loan, such as Bitcoin or Ethereum. This collateralization gives lenders some protection, allowing them to make loans without traditional credit checks or lengthy approval processes. The loan's value is decided by the market value of the collateral and is often expressed as a percentage of its overall worth.
The Advantages of Crypto-Backed Loans
One of the key benefits of crypto-backed loans is that borrowers can access liquidity without selling their digital assets. This is especially useful when people anticipate the value of their cryptocurrencies will increase over time. Borrowers can benefit from potential future returns while fulfilling their immediate financial demands by keeping ownership of their assets.
Process is rapid and efficient
Unlike traditional loans, which can include considerable paperwork and lengthy approval timeframes, crypto-backed loans provide a rapid and simplified process. Because the collateral is maintained digitally, asset verification and transfer can be completed quickly, minimizing the time necessary for loan disbursement.
Because of their speed and efficiency, crypto-backed loans are an appealing choice for individuals seeking rapid access to capital.
Creditworthiness is irrelevant
Crypto-backed loans enable persons with limited credit history or low credit scores to obtain funding. The use of digital assets as collateral eliminates the requirement for credit checks, making these loans available to a wider spectrum of borrowers. This inclusiveness enables those who may have previously struggled to get traditional loans and opens up new avenues for financial growth and security.
Platform Lending: A Decentralized Approach
Crypto-backed loans are made possible by lending platforms that use blockchain technology, taking use of its benefits such as transparency, security, and decentralization.
These platforms act as mediators, connecting borrowers and lenders while ensuring that loan arrangements are carried out smoothly. Here are some of the ways lending platforms are changing the financial landscape:
Lending platforms enable peer-to-peer lending, removing the need for traditional financial institutions to act as intermediaries. Borrowers and lenders deal directly with one another, negotiating loan terms and interest rates based on mutually agreed-upon circumstances. This decentralized method promotes a more efficient and transparent lending procedure, which lowers costs and increases accessibility.
Global Reach
Crypto-backed lending platforms have a global reach, bringing together borrowers and lenders from all over the world. This worldwide marketplace enables borrowers to obtain loans from a diverse pool of lenders, potentially enhancing competition and resulting in more favorable loan terms. Simultaneously, lenders can diversify their investment portfolios by lending to borrowers in different geographies and asset types.
Smart Contracts and Automation
Smart contracts, which are self-executing contracts with predetermined conditions encoded into code, are used by blockchain-based lending systems. These contracts manage loan agreements, collateralization, interest payments, and loan repayments automatically, eliminating the need for manual intervention. The automation of these operations improves productivity, removes the possibility of human error, and improves overall transaction security and reliability.
Tokenization and Fractional Ownership
Tokenization is used by some lending systems to divide loans into smaller units represented by digital tokens. This enables lenders to invest in segments of loans rather than complete loan amounts, allowing for fractional ownership. Tokenization provides lenders with more liquidity while also diversifying risk by spreading investments across numerous loans.
Risks and Regulatory Considerations
While crypto-backed loans and lending platforms present interesting potential, regulatory concerns and associated dangers must be considered:
Regulatory climate
The regulatory climate for cryptocurrency and lending platforms differs by jurisdiction. To ensure the legality and validity of their operations, participants in crypto-backed lending must be aware of and comply with relevant rules.
Volatility and Collateral Management
The price volatility of cryptocurrencies is well recognized. Borrowers and lenders must evaluate the risks associated with market swings and ensure that collateral values are appropriately handled to avoid potential liquidations.
Security hazards
Crypto-backed loans and lending platforms, like any other digital financial business, have security hazards. To protect against potential hacking or fraudulent actions, participants must use robust security measures such as multi-factor authentication, secure asset storage, and adherence to best practices.
5 reasons traditional banks need to get in the game
As cryptocurrencies, P2P loans, and crypto-backed loans gain traction, traditional banking institutions must recognize the necessity of adapting to this new financial paradigm. By staying proactive and forward-thinking, traditional banks can position themselves as key players in the rapidly evolving financial landscape, ensuring their relevance and long-term success.
Conclusion
Crypto-backed loans and lending platforms are reshaping the financial landscape by providing users with a novel means to access liquidity while maintaining ownership of their digital assets. These systems, which use blockchain technology, enable a decentralized, efficient, and transparent lending ecosystem that empowers borrowers and lenders worldwide.
Crypto-backed loans and lending platforms are poised to play a significant role in shaping the future of finance, driving financial inclusion, and unlocking the potential of digital assets for individuals around the world as the regulatory framework evolves and participants mitigate associated risks.
This article was written by FM Contributors at www.financemagnates.com.
WOOFi, a decentralized exchange, suffered an $8.5 million exploit on Arbitrum due to token price manipulation. The platform swiftly contained the threat and is working to retrieve funds and enhance security. (Read More)
Ethereum-based lending protocol Euler Finance could be a step closer to recovering funds stolen in a $196 million flash loan attack last week, with private discussions now initiated with the exploiter. In an on-chain message to Euler on March 20, days after sending funds to a red-flagged North Korean address, the exploiter claimed they now want [...]
The post Euler Finance to enter talks with exploiter over the return of funds appeared first on Crypto Breaking News.
Decentralized finance (DeFi) protocol Euler Finance lost nearly $197 million in a flash loan attack on March 13, impacting more than 11 other DeFi protocols. The vulnerability remained on-chain for eight months despite a $1 million bug bounty in place. Euler Finance disabled the vulnerable etoken module and vulnerable donation function, and has reached out to security firms and the ETH security community to help with the investigation and recover the stolen funds. (Read More)
Euler Finance, an Ethereum-based noncustodial lending protocol, suffered a flash loan attack on March 13, resulting in the loss of millions in Dai, USD Coin, staked Ether, and wrapped Bitcoin. The attacker stole nearly $196 million in multiple transactions, making it the largest hack of 2023. On-chain data indicates that the attack is related to a deflation attack that occurred one month ago, and the attacker used a multichain bridge to transfer funds from the Binance Smart Chain to Ethereum. (Read More)
Notable exploits in 2022 include the Wormhole Hack, Axie Infinity Hack, Nomad Bridge Exploit, and Mango Markets Exploit.
The post Access Control and Flash Loans Among Top Crypto Exploitation Methods in 2022 appeared first on BitPinas.
Platypus is working on a plan to compensate the losses its users incurred following a flash loan attack that saw the decentralized finance (DeFi) protocol [...]
<p class="MsoNormal">Flash loans as its name suggests are literally loans that can transpire instantly. Put literally, imagine we you could borrow millions of dollars, but you had to pay it all back in just a few seconds? With flash loans this can be done with absolutely no collateral. Sound too good to be true? </p><p class="MsoNormal">If you are thinking we are a few short sandwiches short of a picnic, allow us to introduce you to the world of flash loans.</p><p>Flash Loans Explained</p><p class="MsoNormal">Flash loans, to put it in simple terms, is a loan in which someone can borrow massive amounts of money for free with the only requirement being that he or she must pay it back almost immediately. </p><p class="MsoNormal">The process is accomplished by employing smart contracts and their code will have a computer verify if all transactions check out and, of course, whoever is borrowing the money is in condition to pay it back. </p><p class="MsoNormal">So, if you take out a million dollars and repay it in the same transaction, since the initial state is maintained, no one seems to mind, and this is pretty much how flash loans came to be. Flash loans have proven to shore up some obvious weaknesses in traditional loans as well as decentralized finance (DeFi) loans.</p><p class="MsoNormal">By the end of things, if every validation goes through and gets approved, voilà: you have successfully borrowed millions of dollars to do your thing.</p><p>Who Approves Flash Loans?</p><p class="MsoNormal">Naturally, you might be questioning why on earth would anyone want millions of dollars for only a few seconds?</p><p class="MsoNormal">Well, the answer is simple: there’s money to be made. Let’s look at how things were done in the early days and how flash loans can also mean big money.</p><p>Introducing Trading Arbitrage</p><p class="MsoNormal">Trading <a href="https://www.financemagnates.com/terms/a/arbitrage/" target="_blank" id="c297ef24-3074-47a0-a3c1-6f73b43f6594_2" class="terms__main-term">arbitrage</a> in its simplest form means: “buy low, sell high”. Literally. The play is here is simple. Imagine you could buy something for a 1$ and sell it to someone else for 1,5$. If you could repeat the process over and over, you would be making money hand over fist. </p><p>Trading Arbitrage in the World of Bots</p><p class="MsoNormal">Trading arbitrage <a href="https://www.financemagnates.com/tag/arbitrage/">works precisely</a> like that which is why a few people in the early days of flash loans created automated bots which ran code 24x7 with the purpose of identifying these types of opportunities in the crypto universe and do exactly that: buy low, sell high.</p><p class="MsoNormal">As such, investors cleverly figured out that they could take out a massive loan, buy a ridiculous amount of crypto on one of many platforms out there, and immediately sell it to a different platform, making a few cents or even dollars on each coin sold. </p><p class="MsoNormal">So, now imagine you take a flash loan of 50.000.000$, buy 50.000.000 tokens for a dollar each, and in only a matter of seconds sell them immediately for 51.000.000$. </p><p class="MsoNormal">Well, congrats! You made a cool mil in under a minute (minus the fee, of course). </p><p>Flash Loans Wrap Up</p><p class="MsoNormal">It is now incredibly rare for people to create flash loans which take advantage of trading arbitrage. However, is still possible, and investors could and should explore it. </p><p class="MsoNormal">Flash loans capabilities allow for many other things such as collateral swapping, self-liquidation, and so forth. So now the question is: what would you do if you had millions of dollars, even if it was just for a brief moment?</p><p class="MsoNormal">Flash loans as its name suggests are literally loans that can transpire instantly. Put literally, imagine we you could borrow millions of dollars, but you had to pay it all back in just a few seconds? With flash loans this can be done with absolutely no collateral. Sound too good to be true?</p> This article was written by Pedro Ferreira at www.financemagnates.com.
The DeFi primitive has been on the scene for only two years but has already proven to be useful.
The decentralized exchange said that only its lending platform Market XYZ got exploited and that no user funds were compromised.
Hackers of the infamous Cream Finance heist reportedly exchanged roughly 1000 ETH which is worth $1.75 million for 80 RenBTC, blockchain security expert PechShield noted. RenBTC is an ERC-20 token that allows a decentralized representation of Bitcoin within Ethereum. Twitter users reacted angrily with many questioning the platform’s competencies and its inability to prevent such attacks. […]
PeckShield reported through a tweet of the new hack on Cream Finance. The blockchain security company said a flash loan attack on the decentralized finance lending and borrowing protocol. #FlashLoanAlert https://t.co/JPW7e368qd — PeckShield Inc. (@peckshield) August 30, 2021 PeckShield explained that the hacking came through a 500 Ethereum flash loan from the attacker. This was used to infiltrate a reentrancy bug in the smart contract of the Flex Network. Usually, flash loans being undercollateralized can be borrowed and repaid within a single transaction. Related Reading | Cryptocurrency Firms In Switzerland To Offer Tokenized Products On Tezos As a DeFi protocol for lending, Cream Finance allows users to earn interest from their deposited assets. Though Cream Finance is a fork of the Compound protocol, its operation is quite different from Compound or Aave. The platform has several more markets for some esoteric digital assets. 1/4 @CreamFinance was exploited in (one hack tx: https://t.co/JPW7e368qd), leading to the gain of ~$18.8M for the hacker. — PeckShield Inc. (@peckshield) August 30, 2021 This attack on Cream Finance was exploitation involving 1,308 Ethereum and over 418 million AMP, the native token of Flexa Network. According to PechShield, the Ethereum records reveal that over $6 million were hacked at 5:44 UTC. Cream Finance Becomes Another DeFi Protocol Hacked In 2021 Furthermore, the Cream Finance team members confirmed the authenticity of the hacking reporting. Then, reporting on Discord Channel, the project’s official channel, the members started working with PeckShield. The team revealed that the hacking was on the CREAM v1 market on the Ethereum Blockchain. Furthermore, they mentioned that it’s through the reentrancy of the contract on the AMP token. At the time of writing, AMP’s value has dipped by 15% within few hours to $0.05. Also, the value of Cream Finance’s native token, CREAM, plummeted by about 6%. However, ETH is at $3, 190.46 showing a slight dipping within the last 24 hours. The total amount of the Crean Finance hacking is more than $25 million. The address of the hackers shows that they presently have about $18.8 million. Amidst the hack, Cream Finance is down by 6% | Source: CREAMUSD on TradingView.com The Cream Finance team has put a stop to any further loss. The team said that it now has a pause on AMP’s supply and borrow. It further acknowledged that the hack doesn’t affect any other market. Eason Wu, the protocol’s production Manger, disclosed this information on Discord. Recall that earlier in the year; Cream Finance had a huge hack. The attack led to the loss of $37.5 million worth of digital assets. According to the report, the earlier hacking had a root cause from the exploitation of Alpha Finance. Related Reading | Reports Show 45% Surge In Stock And Cryptocurrency Sign-Ups Across Rural Areas In India Flash loans have remained one of the controversial features of decentralized finance. This’s because there’s no collateral needed for the loans, and hence, they are susceptible to hacks. This accounts for the recent attacks and hacks of flash loans. A similar incident is a hack on the Bilaxy crypto exchange on August 28. The exchange had a huge hot wallet hack that compromised about 295 ERC-20 tokens. Also, a hack on Liquid on August 19 resulted in a loss of about $100 million. Featured image from Pixabay, chart from TradingView.com
Euler Finance, an Ethereum-based lending protocol, underwent 10 audits from six different firms in two years before it suffered a $196 million flash loan attack. Despite this, the audits deemed the platform "nothing higher than low risk" with "no outstanding issues." The attack prompted Euler to launch a $1 million bounty for information leading to the hacker's arrest, only for them to move the funds through crypto mixer Tornado Cash. (Read More)
The hacker who stole $196 million from Euler Finance has transferred $1.65 million through Tornado Cash, after a $1 million bounty was launched. Victims pleaded for return of funds, but the hacker's move to a crypto mixer suggests they may not be swayed. On-chain data shows the stolen funds consisted of DAI, USDC, staked ETH and WBTC. (Read More)
Before the move, the hacker apparently refunded at least one victim, leading to a slew of on-chain messages from other purported victims.
The hacker committed a $196 million flash loan attack on the Ethereum-based lending protocol on March 13.
The biggest incidents in October included the Radiant Capital hack, a phishing attack and the hacking incident involving crypto exchange M2.
Polter Finance suffered a $12 million flash loan hack and is now investigating stolen funds linked to Binance wallets and offering to negotiate with the attacker.
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