• Tue. Apr 16th, 2024

Prominent DeFi Protocol Exploited For $7 Million

Dec 19, 2022

Lodestar Exploit

The rumors that surfaced claiming a popular decentralized finance (DeFi) project had been hacked have now been confirmed.

It has now been unearthed that Lodestar Finance, which is a DeFi protocol on Arbitrum. Reportedly, the hacker breached the project’s firewalls and obtained control of the project.

Consequently, funds amounting to US$6.9 Million have been drained out by the hacker. The loss caused to Lodestar and the hack attempt were later duly covered by various media outlets, including printed and electronic.

Confirmation of the hack attack came directly from the DeFi project which took on Twitter to inform the public about the attack. The firm claimed that it was looking into the hack and was trying to mitigate its impact.

Suspension of Liquidation and Borrowing Operations

In the subsequent tweet posts, Lodestar informed the public that as an interim measure the project has set the interest rate to nil.

This means that until the rate is nil, borrowings and supplies shall remain unmoved allowing the project to explore possibilities of recovery.

It has been re-affirmed by Lodestar’s key personnel that until further notice they have temporarily suspended activities of liquidation and borrowings.

This means that none of the users will be able to utilize the farming or borrowing features offered by the protocol.

Although the announcement does raise many concerns about the operational future of the protocol, still, the investors have no choice but to wait for updates.

According to defillama.com, prior to the hack attack, Lodestar’s total value locked (TVL) was more than $18 Million.

LODE’s Nosedive

However, post-attack TVL suggested that it was approximately $11.06 meaning thereby that $7 Million has been drained out.

Consequently, a major upset has been caused upon the DeFi project cryptocurrency known as LODE. As a result of the attack, the value of LODE declined by more than 50% against the greenback.

It was on 23rd November 2022, when LODE saw a surprise value surge which led to the coin’s value above $0.718 per unit. It was the best price LODE has ever seen since its launch to date.

Since then, LODE has lost 76.1% of its value of which 23% was lost before the hack and 53% after the incident.

Although the hack has cost tremendously to the network, the 23% plunge prior to the hack is also alarming.

Presently, more than 76% ripped off LODE has been trading at a price of $0.173 which is undeniably frightening for the project.

Hack Attacks In 2022

The year 2022 was already regarded as the worst year of them all, particularly for the DeFi sector. Since last year, DeFi exploits have doubled this year and so is the loss.

A chain of hack attacks was witnessed during October when at least more than 5 major DeFi projects were exploited. The month was thereafter called by many and is remembered as ‘hacktober’.

Most of them were Ethereum based and included amongst others, Axie Infinity, which alone lost $625 Million at the exploiter’s hands.

All Four Branches of Crypto Are Flat

If one were to divide the crypto industry into branches then there could at least be four major branches that anyone can easily identify.

These branches could be crypto trading, DeFi, the Non-Fungible Tokens market, and lastly the Metaverse.

Currently, all four branches of the crypto industry are undoubtedly flat. It wouldn’t be wrong to suggest that all four corners are squeezing and it seems that the industry’s survival is impossible.

This may be true because there is widespread propaganda at the global level against crypto and the debate further escalated upon FTX’s downfall.

On the other hand, while crypto trading seems no longer viable, the industry was relying on the other three branches.

However, recently, NFT sales have reduced, DeFi projects are being exploited while interest in Metaverse has declined immensely.

Undeniably, the crypto industry is in deep crisis and only time will tell whether it will survive or not.

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