Lack of liquidity mitigated damages to BonqDAO exploit: Report


According to blockchain safety agency CertiK, the harm triggered to decentralized protocol BonqDAO on Feb. 1 could have been a lot lower than initially thought. 

As informed by CertiK, the attacker first borrowed 100 million BEUR, a euro stablecoin, with lower than $1,000 in collateral as a result of an absence 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.

However, CertiK stated 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 as a result of an absence of liquidity on the platform. Previously, blockchain safety companies equivalent to PeckSheild acknowledged that round $120 million was misplaced through the assault.

Bonq is a fork of Liquity Protocol, which, much like that blockchain, makes use of Troves to characterize remoted debt positions. However, Bonq reportedly applied a Community Liquidation Feature the place 45 Troves with BEUR publicity have been liquidated as a result of incident. According to CertiK, the assault additionally impacted Troves containing roughly 110 million Alliance Block tokens (ALBT). That stated, not one of the Alliance Block sensible contracts have been breached through the incident, and the mission has stated it can airdrop new tokens to compensate affected holders.

Bonq protocol was uncovered to an oracle hack, the place exploiter elevated the ALBT value and minted massive quantities of BEUR. The BEUR was then swapped for different tokens on Uniswap. Then, the worth was decreased to virtually zero, which triggered the liquidation of ALBT troves.

— BonqDAO (@BonqDAO) February 1, 2023

Although an absence of liquidity seems to have mitigated damages to BonqDAO through the incidents, others weren’t so fortunate. On Oct. 12, DeFi protocol Mango Markets initially misplaced $116 million after hacker Avraham Eisenberg manipulated the worth of the MNGO token value, driving it up 30 instances by way of monumental perpetual future contracts inside a brief interval. This was doable as a comparatively small preliminary capital was required to govern MNGO as a result of low liquidity. 

Related: How low liquidity led to Mango Markets dropping 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 prices of commodities manipulation and commodities fraud. 

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