DeFi is becoming more common, where crypto startups are trying to create decentralized financial services on the blockchain. DeFi has seen a number of hacks in the last few months. It was not that big of an amount before, but now it has gone up significantly due to DeFi’s popularity.
The seventh-largest DeFi exploit, affecting Qubit Finance, which lost more than $80 million from the hacker’s assault, tweeted the news.
The protocol was exploited by;
The hacker minted unlimited xETH to borrow on BSC.
The team is currently working with security and network partners on next steps.
We will share further updates when available.
— Qubit Finance (@QubitFin) January 28, 2022
By using smart contracts rather than third parties, Qubit Finance offers financial services such as trading, lending, and borrowing on the Binance Smart Chain. The information was announced on Twitter by the developers at nine on Friday, January 28, 2022.
Qubit Finance is a BNB-based smart chain that runs on the Defi platform, letting users borrow against their crypto assets while also providing them the opportunity to offer these holdings to the protocol. It is a blockchain-based platform that allows the collateralization of assets on other networks without requiring them to be moved from one chain to another. The DeFi platform also allows borrowers to borrow assets at low interest rates. Anyone can use Qubit Finance for borrowing or lending crypto assets that will be repaid with interests.
The Defi based platform provides collateralized loans in respect of the crypto. It is a decentralized financial technology that allows people to borrow money from others without going through a bank or an intermediary. DeFi applications are often created on the Ethereum network and do not follow traditional venture capital models.
The DeFi platform has seen an increase in popularity in the last few months, but this DeFi hack surpassed many DeFi hacks before it with a loss of more than $80 million. The DeFi protocol will be used by millions of people around the world over time, which can open up many opportunities for investors who want to learn about something new in this DeFi protocol.
Last night Qubit Finance tweeted to hackers demanding a bounty of $2 million:
— Qubit Finance (@QubitFin) January 30, 2022
The attacker hacked into Qubit Finance by exploiting a vulnerability to gain infinite collateral and steal $80 million from the platform.
They were able to use the bug to easily get the “deposit” without actually transferring any money in the form of collateral. This allowed the hacker to create 77,162 xETH collateral, which they exchanged for nearly $80 million in BNB.
Because the hackers managed to access the account, it took a long time for them to discover that something was wrong. The company said they have attempted to contact the hacker in order to provide “the maximum reward,” which is believed to be $1 million.
A DeFi Hack is a cyber-attack on DeFi platform or DeFi infrastructure used to disrupt DeFi services. Since the advent of DeFi industry, there have several successful DeFi Hacks including Etherdelta, MakerDAO, and recently Bancor that resulted in lost funds.
In December 2017, hackers controlled EtherDelta’s DNS servers, replacing the exchange’s real website with a phony one under their control. Users continued sending Ethereum coins to be traded on this fraudulent site until the aggregate loss was estimated at 30K+ ETH, or around $1.4 million in today’s value.
Defi has faced a number of similar assaults from hackers in the past. The Bancor Network’s wallet was breached, costing $30 million worth of ETH tokens. $12.5 million in Ether and $10 million in Bancor’s BNT were stolen after hackers illegally accessed the system to get away with it.
Hackers have also targeted MakerDAO previously, resulting in three hard forks on its mainnet and losses for MakerDAO users.
Defi created a flurry of excitement among investors who want to jump on the trend early, especially because DeFi stands out as an alternative to traditional finance systems who have taken long strides towards building massive monopolies over financial markets. However, this meetup with success also means it’s time to take a close look at any weak points in the Defi framework before large amounts of money gets lost again . In this case, Qubit Finance was hacked for $80 million.
Not only the investors but also the developers need to be cautious of the bugs in their Defi platform to avoid any kind of hacking by attackers. After the Qubit Finance DeFi Hack, it has become clear that there are bugs in the system.
The Defi was hacked at around 1:00 pm EDT when a user’s balance simply disappeared without any explanation. Within minutes, Reddit and Twitter were full of complaints about missing balances. The entire account value of $80 million just vanished overnight! It didn’t take long for users to figure out what had happened – an exploit was used by attackers to withdraw all funds from user accounts through one withdrawal transaction.
It is still unclear how the problem occurred so quickly but developers should leave nothing to chance. It is necessary for them to fully understand the vulnerabilities within their own platform before allowing large sums of money to go through.
If you are a developer or investor in DeFi, learn from this hack. Be sure to keep an eye on your balance at all times because ultimately, it’s your responsibility if something goes wrong with the system.
The Qubit Finance DeFi Hack is a reminder that no system can be taken for granted anymore. Developers should be open-minded about every possible scenario and leave nothing to chance before going live with their platform.
Once again, large sums of money will not appear overnight so investors should stay away from the hype as much as possible lest they get burned. Everything is a learning experience and the Qubit Finance DeFi Hack will be a valuable lesson for both developers and investors in Defi. It’s not too late to take precautions before the next disaster!
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Image by Pete Linforth from Pixabay
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