Robert Steinadler, 5 months ago
Statistically speaking, October is one of the best-performing months for Bitcoin. While the market is waiting for inflation data to be presented, the “Uptober” became the “Hacktober” this week. Two DeFi protocols got hacked this week and hackers damaged investors for millions of Dollars again.
What happened during the recent events and what makes one case specifically obscure?
Mango Markets is a protocol for margin and derivatives trading. On October 11 a hacker managed to manipulate the spot price for the native MNGO token. At the same time, he had a leveraged position open which in the end was a bet that the MNGO price would increase.
Once he successfully managed to manipulate the price, he took out a loan on his position without closing it. This way he was able to withdraw several different crypto assets that were combined worth more than $100 million.
After that, he made a proposal on Mango Markets DAO offering to pay parts of his loot back under the condition that he could keep the rest without legal consequences. While some observers simply chose to laugh at the situation, the team behind the protocol is in a desperate position. Should they refuse, there is no way of getting the tokens back. The hacker on the hand has also nothing to gain since his address is already tainted.
On the same day, TempleDAO faced also an exploit that was possible due to a vulnerability in its code. This caused another $2 million in damages. This was not as spectacular as the exploit of Mango Markets, but this case proves again how important audits are.
The DeFi community is facing yet another blow and both were not the only incidents this month. Chainalysis registered 11 hacks this month resulting in a total loss of $718 million. Taking other hacks and exploits into account, the DeFi industry lost billions of Dollars in the past two years.
These numbers are often used to show that DeFi doesn’t work and is a dangerous investment. What critics don’t take into account is the sheer number of Dollars that are managed successfully and securely. Investors should keep in mind that many of the financial products are highly experimental and more established applications offer higher security standards than smaller competitors. It is expected that not only the value of DeFi will increase within the next 10 years, but also security standards as the industry constantly learns from these incidents.
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