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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.
Its a bullish season for cryptocurrencies, and the market is brimming with opportunities for savvy investors. Cardano (ADA) is rallying hard, up over 22% and gunning for the $1 milestone as its trading volume surges. Aave (AAVE), meanwhile, is captivating the DeFi crowd with its innovative flash loans, offering instant, no-collateral borrowing. But if youre […]
In Q1 2023, hackers accessed over $320 million through 139 incidents on BNB Chain and losses of $221 million on Ethereum. While significantly lower than Q1 and Q4 2022, the quarter saw hundreds of millions lost, with 60% due to the Euler Finance hack. However, funds were recovered through negotiations with hackers, a trend increasingly common in the industry. (Read More)
Traditional financial services are being reshaped by innovation in the world of cryptocurrency. Crypto lending is one such innovation, a burgeoning industry that allows individuals and corporations to lend and borrow digital assets.
Crypto financing takes advantage of the unique properties of blockchain technology and cryptocurrencies to create new opportunities for investors, borrowers, and lenders alike. This article delves into the realm of crypto financing, investigating its benefits, hazards, and the forces fueling its rapid growth.
Understanding Cryptocurrency Lending
Crypto lending, also known as decentralized lending or peer-to-peer lending, is a method of lending or borrowing digital assets via smart contracts on blockchain networks. Unlike traditional lending, which requires the use of middlemen such as banks, crypto lending eliminates the need for intermediaries by leveraging decentralized platforms based on blockchain technology.
Borrowers can use their digital assets as collateral to secure loans in the crypto lending ecosystem, while lenders can contribute funds and earn interest on their holdings. Smart contracts help to streamline the financing process while also providing secure and transparent transactions. The loans are often collateralized, which reduces the risk for lenders while allowing borrowers to access funds without the need for traditional credit checks.
The Advantages of Crypto Lending
Liquidity
Crypto financing provides new ways for people and enterprises to obtain liquidity without selling their digital assets. Borrowers can use their holdings as collateral to obtain instant loans for a variety of goals, including increasing their crypto investments, supporting business endeavors, and satisfying personal financial necessities.
Diversification of Investment
Crypto lending allows lenders to diversify their investment portfolios beyond traditional assets. Investors can earn interest on their digital assets by lending them, potentially creating passive income and reducing dependency on traditional investing options.
Global Accessibility
Because crypto lending crosses geographical barriers, it allows borrowers and lenders from all around the world to engage in the lending ecosystem. This global accessibility allows people in underdeveloped areas to obtain funds and build credit histories, promoting global financial inclusion.
Increased Efficiency
By automating activities, removing paperwork, and lowering administrative costs, the use of blockchain technology in crypto lending streamlines the loan process. Decentralized platforms give a public and immutable record of loan activity, while smart contracts assure secure and efficient transactions.
Competitive Interest Rates
When compared to traditional banking institutions, crypto lending platforms frequently offer competitive interest rates. Because of the elimination of intermediaries and decreased operational expenses, lenders can provide competitive interest rates, while borrowers can benefit from more favorable loan arrangements.
Considerations and Risks
Volatility
The price volatility of cryptocurrencies raises hazards for both lenders and borrowers. The value of digital assets used as collateral might fluctuate fast, potentially resulting in loan defaults or collateral liquidation. Borrowers must carefully manage their holdings, while lenders must evaluate collateralization ratios and modify loan terms accordingly.
Regulatory Uncertainty
In many jurisdictions, the regulatory landscape surrounding cryptocurrencies and crypto loans is still emerging. Participants in the crypto financing ecosystem may face ambiguity and potential dangers due to a lack of defined norms and legal frameworks. Borrowers and lenders must be informed about regulatory developments and follow applicable legislation.
Smart Contract Vulnerabilities and code Errors
While smart contracts provide automation and security, they are not immune to vulnerabilities or code errors. Smart contract flaws can be exploited, resulting in financial losses for lenders or borrowers. To mitigate smart contract risks, thorough audits, due diligence, and the use of trusted lending platforms are required.
Counterparty Risks
Borrowers and lenders interact directly without the use of intermediaries on decentralized lending systems. As participants rely on the reliability and trustworthiness of the individuals or companies with whom they engage, counterparty risks arise. Conducting thorough research, analyzing reputations, and employing reliable lending platforms are all critical components of managing counterparty risks.
The Factors Influencing the Expansion of Crypto Lending
Yield-Seeking Environment
Due to the low-interest-rate environment common in traditional financial markets, investors are looking for new investment options. Crypto lending offers lower interest rates than traditional choices, enticing investors looking for larger returns on their investments.
Increased Crypto Adoption
As cryptocurrencies gain wider recognition and adoption, the need for crypto-related financial services, such as loans, grows. Individuals can use their digital assets as collateral and gain access to loans as the crypto ecosystem grows.
Growth of Decentralized Finance (DeFi)
The growth of decentralized finance (DeFi), a sector within the blockchain ecosystem that aspires to reproduce traditional financial services in a decentralized fashion, is directly linked to the growth of crypto loans. DeFi protocols and platforms promote crypto financing, laying the groundwork for its growth.
Stablecoins, CBDCs and the viability of crypto lending
The rapid rise of cryptocurrencies has given birth to innovative financial services, including crypto lending. However, the inherent volatility of cryptocurrencies poses significant challenges for lending and borrowing activities. To overcome these hurdles, stablecoins and Central Bank Digital Currencies (CBDCs) emerge as potential solutions that can enhance the viability of crypto lending.
The volatility challenge
Cryptocurrencies’ values can fluctuate dramatically within short periods, making them inherently volatile. This volatility poses a significant risk for both lenders and borrowers in the crypto lending space.
For lenders, the fluctuating value of cryptocurrencies means that the value of the collateral used to secure loans can change rapidly. This creates uncertainty about the value of the collateral in the event of default, potentially leading to significant losses. On the other hand, borrowers face the challenge of repaying loans denominated in cryptocurrencies whose values can drastically change. This volatility makes it challenging to plan and meet repayment obligations, as the value of the borrowed amount may differ significantly from the original expectation.
Stablecoins: bridging the gap
Stablecoins are cryptocurrencies designed to minimize price volatility by pegging their value to a stable asset, such as a fiat currency or a commodity. By maintaining a fixed value, they provide stability and predictability that traditional cryptocurrencies lack. These characteristics make them an ideal medium of exchange for crypto lending.
Crypto lending platforms that utilize stablecoins as their primary lending currency benefit from the stability and fixed value that stablecoins offer. Lenders can accurately assess the value of collateral and determine appropriate loan-to-value ratios. Similarly, borrowers can plan their repayments without the constant worry of fluctuating cryptocurrency values.
The promise of CBDCs
Central Bank Digital Currencies are digital representations of a country's fiat currency issued by a central bank. They aim to combine the advantages of cryptocurrencies with the stability and trust associated with traditional fiat currencies. While the implementation of CBDCs is still in progress in many countries, they hold immense potential to transform the crypto lending landscape.
CBDCs, being backed by central banks, offer stability in terms of value, mitigating the volatility concerns associated with traditional cryptocurrencies. When CBDCs are used as a medium for crypto lending, both borrowers and lenders can operate within a framework of fixed numbers, similar to traditional lending practices. This stability enhances trust and confidence in the lending process, attracting more participants to the market.
Moreover, the integration of CBDCs with existing financial infrastructure opens up opportunities for regulatory oversight and consumer protection. This regulatory oversight ensures compliance with anti-money laundering (AML) and know-your-customer (KYC) regulations, making the crypto lending space more secure and reliable.
Conclusion
Crypto lending is a disruptive force in the financial sector, providing individuals and organizations with new ways to access liquidity and generate passive income. Crypto lending is gaining interest in the fast changing world of cryptocurrencies due to its benefits of enhanced efficiency, worldwide accessibility, and investment diversification. Participants, on the other hand, must be aware of the risks associated with volatility, regulatory uncertainty, and smart contract weaknesses.
As the crypto lending sector matures, regulatory clarity, risk management techniques, and due diligence will become increasingly important in guaranteeing the long-term viability and sustainability of this novel financial institution.
Please keep in mind that the information in this article is strictly for educational purposes and does not represent financial advice. Before engaging in crypto lending or making other investing decisions, it is critical to undertake extensive research and consult with a knowledgeable financial advisor.
This article was written by FM Contributors at www.financemagnates.com.World Crypto Global opens the door to digital freedom for everyone.
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