Raft Finance, a Liquity fork, faces a significant security breach as a hacker exploits a vulnerability, resulting in the loss of $3.3 million in ether. The attacker’s unusual actions have raised questions about their motives, leaving uncertainty regarding the protocol’s future. RAFT token price plummets by 60% after the breach.
In a recent incident that sent shockwaves through the world of decentralized finance, Raft Finance fell victim to a severe security breach. The hacker successfully exploited a vulnerability in the protocol, leading to the loss of approximately $3.3 million in ether.
The Unusual Exploit and Its Consequences
Raft Finance, which emerged as a fork of Liquity, had staked ether as the collateral source for its stablecoin, R. The hacker managed to exploit the vulnerability, resulting in a significant deviation from R’s intended $1 peg. This prompted the Raft team to act swiftly, confirming the vulnerability and halting further minting to prevent additional losses.
In a surprising turn of events, the attacker minted a substantial 6.7 million R tokens, which were then exchanged for 1,575 ether (ETH). However, what makes this exploit unique is the subsequent action by the attacker. They sent 1,570 ETH to a burn address, effectively removing it from circulation. This left the hacker with a mere 7 ETH from the stolen funds.
A Preplanned Attack?
Before the attack, the hacker’s address had received 18 ETH through a crypto mixer service, indicating a degree of premeditation and planning. The circumstances surrounding this attack are indeed unusual, as the majority of the stolen funds were seemingly burned. This has led to speculation about the attacker’s motives, leaving room for the possibility that the loss was accidental.
Uncertain Future and Recovery Plan
The aftermath of the breach raises questions about the future of the Raft Finance protocol and its users. Developers have assured the community of an “in-depth recovery plan” to be unveiled in the coming week. This plan will outline steps to address the situation and provide redress for affected users. Community feedback will be sought before the plan is executed.
Token Price and Total Value Locked (TVL)
Raft Finance had issued a governance token (RAFT) in an airdrop, granting holders voting rights over the protocol. However, the price of RAFT has plummeted by about 60% in the wake of the exploit.
Additionally, the total value locked (TVL) in the protocol, which had peaked at $64 million in July, has seen a steady decline, with only $1.48 million remaining as of today. The formerly dollar-pegged stablecoin R now exhibits volatility and limited liquidity on a few decentralized exchange markets. While the creation of new R tokens has been suspended, users can still repay their R-related debts to retrieve locked collateral.
The Raft Finance community awaits the upcoming recovery plan, hoping for a way forward after this significant security breach.