DeFi or Decentralised Finace, has grown in popularity, paving the way for a fully decentralized financial sector. However, because of the revolutionary nature of space, DeFi is still a work in progress and thus vulnerable to several flaws.
In a recent development, the decentralized finance project xToken was subjected to yet another attack after the nefarious individuals behind it discovered a vulnerability in its xSNX product’s smart contracts. The xToken team highlighted a weakness in its xSNX contract that was exploited by hackers, resulting in a $4.5 million loss in the latest post-mortem report.
xToken chose to discontinue the xSNX product line, citing the present xSNX implementation as their “most complicated product,” with “complex dependencies” and “large surface area for vulnerabilities.”
Return of the DeFi X-ploiter
This isn’t the first time xToken has been victimized in this way. Roughly three months ago, the DeFi platform was robbed of $24 million in the same token, according to the same attack method. While this was sad, several in the crypto sector pondered about what would have happened if appropriate security controls had been implemented. Rekt Capital highlighted, along with the same line Analyst,
“X-token rekt once more, and it appears that flash loans are still popular. xSNX contract worth $4.5 million was stolen. This team had previously lost $24 million to the same offensive strategy three months prior. XToken is a great protocol, we wrote at the time. We’re not so sure anymore.”
The analyst also agreed that withdrawing the offering was prudent, but questioned the DeFi project’s public admission that the xSNX was too sophisticated, given the team’s disclosure of the product’s flaws.
“While withdrawing their xSNX offering may be prudent, aren’t they only exacerbating the damage to their reputation by openly acknowledging that it was too hard for them?”
DeFi hacks totaled $361 million by July 2021, according to crypto intelligence firm CipherTrace, accounting for three-quarters of the total hack volume in the cryptocurrency market this year. Despite technological advances, many industry experts predict that DeFi-related crime and security breaches will continue to push decentralized finance forward in the future.
Several prominent industry figures have already stated that the lack of KYC is a driving force behind the rise in hacks that unwittingly provide bad actors with access to financial services for criminal purposes.
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