Cryptonews Altcoin News

DeFi Protocol Platypus Finance Hacked for Over $2 Million on Avalanche – Here’s What Happened

DeFi Hack

Author

Ruholamin Haqshanas

Author

Ruholamin Haqshanas

About Author

Ruholamin Haqshanas is a contributing crypto writer for CryptoNews. He is a crypto and finance journalist with over four years of experience. Ruholamin has been featured in several high-profile crypto...

Author Profile

Last updated:

October 23, 2023

Why Trust Cryptonews

Cryptonews has covered the cryptocurrency industry topics since 2017, aiming to provide informative insights to our readers. Our journalists and analysts have extensive experience in market analysis and blockchain technologies. We strive to maintain high editorial standards, focusing on factual accuracy and balanced reporting across all areas - from cryptocurrencies and blockchain projects to industry events, products, and technological developments. Our ongoing presence in the industry reflects our commitment to delivering relevant information in the evolving world of digital assets. Read more about Cryptonews

Decentralized finance (DeFi) protocol Platypus Finance has fallen victim to a security breach resulting in the loss of over $2 million.

In a recent blog post on X (formerly Twitter), security firm PeckShield noted that the Avalanche-based project has been exploited.

Following the alert, Platypus Finance confirmed that there had been suspicious activities in the protocol, prompting the project to take “the proactive measure of temporarily suspending all pools.”

“Further updates will be communicated to the community in a timely manner.”

https://t.co/3TOoqAjQxE
— PeckShield Inc. (@peckshield) October 12, 2023

The attack appears to have been executed through a flash loan attack, specifically targeting the AVAX-sAVAX liquidity pool.

However, Platypus Finance has yet to release an official comment on the specific attack vector employed.

Flash loans are a feature in decentralized finance that enables users to borrow assets without providing collateral, as long as the loan is repaid within the same transaction block.

Unfortunately, attackers have found ways to exploit this mechanism, manipulating market prices or exploiting vulnerabilities within DeFi protocols.

By borrowing substantial sums, attackers can artificially create market conditions, taking advantage of the resulting discrepancies for profit before repaying the loan, all within a single transaction block.

This is not the first time Platypus Finance has experienced a security breach.

In a similar incident in February 2023, the project suffered a flash loan attack targeting its newly launched stablecoin called USP, resulting in a loss of $8.5 million.

Experts Say There’s Long Way Ahead Before Crypto is Safe

While crypto security is without a doubt a critical concern, the industry is still in its early stages when it comes to protecting digital assets.

“With numerous hacks and exploits occurring, it’s evident that there’s a lot of work to be done to make the field safer,” Sipan Vardanyan, CEO and Co-Founder at crypto security firm Hexens, said in a recent interview with Cryptonews.

So far this year, Web3 platforms have lost over $1.2 billion in hacks and rug pulls, according to a report from Web3 bug bounty platform Immunefi.

The report revealed a total of 211 separate incidents contributing to this massive sum, with the month of August alone accounting for $23.4 million in losses.

As reported, Concordium founder Lars Seier Christensen believes identity verification is essential in preventing cryptocurrency scams.

“To prevent scams, there has to be some level of identity verification, a means to verify that the parties involved in any given transactions are actually who they claim to be,” he said.