Stablecoin Protocol Beanstalk Loses $182M in Flash Loan Attack

Ethereum-based stablecoin protocol, Beanstalk Farms has fallen to be victim to a cyberattack as hackers drained $182 million in cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term from the platform on Sunday.

As confirmed by the protocol developers, the perpetrators exploited the platform by taking a $1 billion flash loan on the lending platform Aave denominated in three stablecoins, DAI, USD Coin and Tether. This enabled them to hoard a significant amount of Beanstalk’s native governance token, Stalk.

The hackers thus gained a majority voting power in the decentralized finance (DeFi) platform and executed malicious governance proposals, thus draining the liquidity.

“Beanstalk did not use a flash loan resistant measure to determine the % of Stalk that had voted in favor of the BIP. This was the fault that allowed the hacker to exploit Beanstalk,” the project leads of the exploited platform explained.

According to the blockchain analytics firm, PeckShield, the hackers already got away with $80 million in the exploited funds and transferred them to the crypto mixer, Tornado Cash.

Interestingly, the hackers donated $250,000 in stolen cryptocurrencies to Ukraine's relief wallet.

“It’s unfortunate that the same governance procedure that put beanstalk in a position to succeed was ultimately its undoing,” a spokesperson from Beanstalk said.

However, the exploited crypto project did not detail if it is going to compensate the victims of the attack. Meanwhile, the value of Beanstalk’s BEAN stablecoin Stablecoin Unlike other cryptocurrencies like Bitcoin and Ethereum, stablecoins are cryptocurrencies that have been designed to keep a stable value. Placing a greater emphasis on stability over volatility can be a huge draw for some investors. Many individuals can be turned off from large swings and uncertainty presented by cryptos relative to other traditional assets.Stablecoins control for this volatility by being pegged to another cryptocurrency, fiat money, or to exchange-traded commodities, including Unlike other cryptocurrencies like Bitcoin and Ethereum, stablecoins are cryptocurrencies that have been designed to keep a stable value. Placing a greater emphasis on stability over volatility can be a huge draw for some investors. Many individuals can be turned off from large swings and uncertainty presented by cryptos relative to other traditional assets.Stablecoins control for this volatility by being pegged to another cryptocurrency, fiat money, or to exchange-traded commodities, including Read this Term collapsed after the attack, trading almost 80 percent below its pegged value of $1, as of press time, according to CoinGecko.

Vulnerable DeFis

DeFi platforms have been touted as the real challenger to the traditional finance industry. But, these platforms have numerous vulnerabilities, making them easy targets for hackers. Several DeFi platforms have been attacked in recent years, draining hundreds of millions of dollars from these platforms.

Last month, the cross-chain bridge, Ronin Network was exploited resulting in the theft of almost $600 million worth of cryptocurrencies. It was the backbone of one of the largest decentralized games, Axie Infinity.