$370,000 lost in Opyn’s Hack, thus raising issues on Defi Platforms

Opyn announced over $370,000 in user funds were thieved, by utilizing flaw in Opyn ETH Put contracts.

By · Aug 7, 2020 . 7min read

Defi Opyn hack

The decentralized finance (DeFi) platform Opyn announced it was hacked, via a blog post. On Aug 4, 2020, theft of over $370,000 in user funds took place. The hackers utilized a flaw in the Opyn ETH Put contracts. An unidentified hacker conducted a “double-spend” attack, on Opyn’s network with oTokens.

It enabled them to steal 371,260 USD coins from various smart contracts. Double-spending is a transaction that utilizes the same input as another transaction that has already been validated on the network. Owing to a bug in the way Opyn’s vault program was coded, the system was hacked according to PeckShield.

One of the traders tweeted about the hack explaining the attackers used flash loans to buy ETH Put oTokens from Uniswap.

One of the Trader explains about the hack.

Opyn reacted to the exploit by disabling the ability to procure oTokens and trade their smart contract portfolios. This move helped to liquidate ETH Puts, thus averting the possibility of any further collateral from exploitation. Since the hack took place, the Opyn team has removed 439,170 USDC collateral from outstanding vaults to provide collateral to Put sellers safely. They have also removed liquidity from Opyn ETH pools on the token exchange platform Uniswap.

Opyn to Work on Security Grounds

Consequently, the DeFi platform is taking measures to prevent prospective exploits. In its latest report, the team agreed to examine its internal security and trialing practices. Moreover, the Opyn development team will carry additional audits. It will start exploring all future contracts through Echidna, an advanced program for testing smart-contracts. 

Opyn Offers to Reimburse Sellers

Opyn declared it would reimburse the amount to sellers. The Opyn team promises complete reimbursement for ETH Put oTokens sellers who wasted money in the hack. They also declared to purchase oTokens with a 20% markup on the Deribit options exchange. It will help to repay token purchasers for losses.

Decentralization is one of the main features of Opyn’s general options protocol, “Convexity”. Thus, the DeFi platform’s team doesn’t control it and can’t shut it down in the event of a hack. Suspending its ETH Put Pools on the platform, Opyn moved to block these oTokens. It helped them liquidation on decentralized exchanges like Uniswap.

Trading on Decentralized Networks: Safe or Unsafe

Decentralized networks are experiencing security breaches frequently. China’s dForce made headlines for squandering $25 million in funds to a malicious actor using still another security flaw in its network. Additionally, hackers gained easy access to lending firm BlockFi’s network by a SIM port in May.

It proposes the issues of how safe traders’ assets on these platforms are. However, adequate steps are taken to stop the loss of funds by decentralized platforms. Decentralized platforms are also working on security. Nonetheless, the attacks are still taking place, planting doubt on whether it is safe to trade.

For more updates, follow Cryptodose.

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