Lido Finance revealed in a Sunday, September 10 statement that acknowledged flaws in the token contract. The admission arose from the discovery of hackers exploiting the security flaw existing in its LDO’s token contract.
The Ethereum staking protocol confessed the awareness of the security flaw within the token contract. The protocol made the revelation in response to an inquiry by responding to blockchain-based security chief SlowMist. The security flaw allows exploiters to launch fake deposit attacks, allowing them to initiate transfers whose value exceeds what the user owns.
Lido Finance Assures Tokens Immune From Security Flaw
The revelation prompted Lido Finance to dismiss the vulnerability that extends to Lido DAO (LDO) and staked-Ether (stETH). The firm hardly confirmed the occurrence of exploits. Instead, it acknowledged knowing the security flaw existed.
SlowMist illustrated that the flawed token contract enabled the bad actors to execute fake deposit attacks. The flawed LDO token contract facilitates the exploit on exchanges since users can complete transactions even when they lack sufficient funds.
SlowMist faults Lido Finance as breaching the standard stipulated by the Ethereum Request for Comment 20 (ERC-20). Lido Finance dismissed wrongdoing rather than arguing the flaw traces to all ERC-20-based tokens, hence not an exclusive weakness for LDO tokens.
Lido Finance indicated that SlowMist’s discovery of fake deposit attacks exists within the LDO token. The vulnerability arises when executing transfers of larger value than actual holding since it triggers false returns rather than revert transactions.
Lido Finance acknowledged that the flaw in the token’s contract facilitated the fake deposit attack. Nonetheless, the Ethereum staking protocol failed to provide on-chain evidence concerning the exploit.
Also read:Crypto Exchanges Struggle to Detect Security Lapses Affecting Tokens
The revelation of a flawed token contract prompted on-chain analyst Hercules to disclose on Sunday, September 10, that crypto exchanges may fail to pick such security lapses. SlowMist directed LDO holders to counter-check the return values in token contract transfers besides the success and failure experienced in various transactions.
The blockchain security firm indicated that various protocols deploy unique contract implementations and behaviors relative to the project. However, it is paramount for the protocol to exercise comprehensive assessment before the integration of new tokens.
Lido outlined in its official documentation titled Ethereum Improvement Proposal that Vitalik Buterin, also co-authored in 2015, that status is reflected in both transfer and transferFrom activities. Also, the protocol indicated that reverting transactions occur in exceptional instances.
Lido Finance restated that it is devoted to resolving the security flaw. Besides, the staking protocol confirmed plans to update the integration guides deployed to the LDO token.
LDO DAO Market Performance
A review of the Lido DAO (LDO) shows the mild effect of the revelation of security flaws. At 12:17 UTC, LDO is exchanging hands at $1.46, a 2% slip in the past day. The token price is 5.77% down in the past seven days, with its daily trading volume at $25.917 million.
A review of the CoinGecko data shows LDO’s circulating supply is 890 million tokens, attracting a cumulative market capitalization of $1.294 billion to rank 37 largest crypto project. Its daily trading volume approximates $25.917 million, translating to a 27.50% increase in market activity.
A comparison of Lido DAO with peers shows the native token of Lido Finance has slipped 5.80% in the past week. The decline leaves LDO underperforming the global crypto market, estimated to slip by 1.70%. LDO is underperforming, considering that the cryptocurrencies within the Polygon Ecosystem remain unchanged.
While the market sentiment shows the community is bullish on LDO, its price is still 80.11% from the all-time high of $7.30 realized on August 20, 2021.
LDO tokens are majorly traded within the centralized exchanges. The token is attracting DigifiFinex, where LDO/USDT tops the list of the active trading pair at $360,415. The token holders can trade in Binance and BingX.
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