In a recent security breach, the decentralized finance (DeFi) protocol Deus Finance lost over $6 million. The attacker targeted the protocol’s stablecoin DEI (DEI) by exploiting a vulnerability in the BNB Smart Chain (BSC) and the Arbitrum network. As a result, the price of DEI plummeted by 30%, as indicated by CoinMarketCap data.
PeckShield Identifies BSC Vulnerability Behind the Attack
Deus Finance is a decentralized marketplace that enables the trading of digital and non-digital assets, such as commodities, on the Ethereum blockchain.
On May 5, blockchain security firm PeckShield reported that a bot initiated the hack on the BSC, leading to over $1.3 million loss. The attacker also targeted the Arbitrum network, causing ARB/ETH deployments to lose more than $5 million. Several Twitter users pointed to a basic implementation error in the token contract as the primary cause of the attack.
Deus Finance confirmed the attack in response to the security incident, paused all contracts, and burned DEI tokens to prevent additional damage. “We are currently in the process of comprehending the actual backing of DEI tokens,” the Deus team stated on Twitter. They also mentioned that a “comprehensive recovery and redemption plan” would be developed following a thorough analysis of balances and snapshots.
DEI, a collateral mechanism for third-party instruments built on the Fantom protocol, experienced a 30% price drop within 24 hours. According to CoinMarketCap data, the stablecoin is currently trading at $0.20, having lost its $0.30 peg. DEI had lost its $1 peg in the aftermath of the Terra collapse last year.
Deus Finance’s Troubled History with Security Incidents
Sadly, it is not the first time Deus Finance has fallen victim to a security breach.
In March 2022, the protocol was exploited in a flash-loan attack, resulting in losses exceeding $3 million in Dai and Ether. PeckShield disclosed that the exploiters had funneled the stolen funds through the crypto mixer Tornado Cash.
The recent attack on Deus Finance and its stablecoin DEI underscores the need for heightened security measures and constant vigilance in the DeFi ecosystem.
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