Not good news for cryptocurrency consumers in general, as Raydium, a Solana-based decentralized finance protocol, was hit by a liquidity pool exploit on Friday.
Solana is currently struggling to recover from the devastating damage caused by the shocking downfall of one of its most prominent backers, the disgraced FTX founder Sam Bankman-Fried, when one of its key DeFi protocols was breached.
The company initially suspected that the attacker had accessed the exchange’s administrative account. According to Raydium, “power” over the farm and automated market-maker programs has now been temporarily frozen.
Users can exchange, lend and borrow crypto assets with each other without the use of intermediaries using DeFi technologies. By allowing users to contribute assets to a pool, often in exchange for tokenized rewards, automated market makers like Raydium do so.
In an attack, Raydium loses $2 million
After the current incidents, Raydium has now published a list of the affected wallets. The exploit was used to steal a range of tokens including Raydium, Wrapped SOL, US Dollar Coin and others.
Nansen, a blockchain analytics firm, has also been quick to share its research since the incident, noting that a hacker stole over $2.2 million worth of digital assets from one such pool on Raydium in a matter of hours on Dec. 17 , including $1.6 million worth of SOL.
Additionally, a Raydium admin account removed a significant amount of liquidity from the log, which was the start of the suspicious activity.
There were approximately 1,000 transactions on the Solana network that did not replace it with the required LP token. Although the circumstances have been clarified, it is unclear how the hacker got hold of the data.
An exploit on Raydium that affected liquidity pools is being investigated. Details will follow as soon as more is known
⁰Initial understanding is that ownership authority has been seized by the attacker, but authority for AMM and farm programs has been stopped for now
Attacker Accounthttps://t.co/ZnEgL1KSwz
— Raydium (@RaydiumProtocol) December 16, 2022
The first discovery of the exploit appears to have been spotted by the Prism development team. At 2:00 p.m., they posted a notice informing users that an attacker was stealing funds from Raydium without first depositing LP tokens and then burning them.
Prism immediately issued a warning to its users, advising them to take precautionary measures by removing their Prism and USDC tokens from the decentralized exchange. Overall, the team’s quick thinking and communication helped mitigate the potential impact of the attack.
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There seems to be a wallet that drains LP pools from Raydium liquidity pools by using the admin wallet as a signer without having/burning LP tokens.
We have withdrawn the PRISM/USDC liquidity provided in the protocol from Raydium
WITHDRAW YOUR PRISM/USDC LIQUIDITY FROM RAYDIUM
— PRISM (@prism_ag) December 16, 2022
Raydium, one of the most significant decentralized finance protocols in Solana, is considered to be the core of the Solana DeFi ecosystem.
Because the protocol was vulnerable to such a top-down technique of exploitation, several people in the Raydium community suggested deprecating it entirely.
Similarly, admin account hacks have become a recurring problem in the cryptocurrency sector of late. The Ankr protocol deployer key was stolen on December 2 and the attacker used it to remove a total of $5 million in BNB.
An identical method was used to breach the Ronin network bridge earlier this year. In this case, the attacker made off with more than $600 million worth of bitcoin loot.
The current exploit was discovered just a month after it stole $650 million worth of digital assets from several FTX wallets, which were in the midst of bankruptcy at the time.
Bankman-Fried later said that while the attack wasn’t his fault, a former FTX employee may have been responsible. Bankman Fried was arrested Monday on eight criminal charges, including conspiracy, wire fraud and money laundering.
The Raydium team is still investigating the exploit as of this writing and has not said whether victims of the attack will receive any compensation.
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In the hours following the attack, Raydium’s native token RAY fell more than 8% to $0.16 at the time of writing, according to CoinGecko. DeFi Llama reports that the total value of the protocol has dropped to $34.73 million as of this writing, down more than 27% over the same period.
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