By Shelly Melancon (Switzerland)
Multichain decentralized finance protocol, ChainSwap, is the latest victim of an attack that saw the platform lose $8 million in DeFi tokens. This time around, it is not a flash loan attack as most DeFi attacks in recent times have been. According to reports, the hackers took advantage of a deficiency in its smart contract to initiate the attack.
ChainSwap announced the development via its Twitter page where it urged users not to purchase the ‘currently traded $ASAP.’ $ASAP is ChainSwap’s native token used for governance and other use cases. According to its Twitter report, users affected by the hack will be duly compensated. Over 10 tokens with various liquidity pools on the DeFi protocol were also affected.
ChainSwap to Issue New Tokens to $ASAP Holders and LPs
However, ChainSwap would abandon the current $ASAP tokens for newly minted ones as it believes the initial circulating tokens have been compromised. $ASAP’s holders and liquidity providers have had their addresses and pre-hack balances screenshotted, ChainSwap reported. Accordingly, new tokens will be airdropped to holders and liquidity providers on the protocols including holders on centralized exchanges.
ChainSwap listed some tokens that were affected by the hack as follows; Wilder Worlds ($WILD), Antimatter ($MATTER), Optionroom ($ROOM), Umbrella Blank ($UMB), Nord ($NORD), Razor($RAZOR), Peri ($PERI), Unido ($VTX), Oro ($ORO), Vortex ($VTX), Blank ($BLANK), Unifarm ($UFARM). It assured holders and LPs of this token will be compensated as well. Unfortunately, the attack affected the prices of some of these tokens including $WILD which plummeted by almost 100%. The token is also showing signs of recovery, notwithstanding.
Also read:DeFi Space Has Been Facing Series of Attacks Since 2020
The decentralized finance space is regarded as the Wild West as there are no regulatory bodies or central authority to oversee activities in the space, unlike centralized finance that has the banks and financial regulators on standby. Despite that, investors have been mostly attracted by the promise of high annual percentage yields, absence of third parties including low transaction fees. The DeFi space has lived up to this promise but the risks inherent in the space can be high as well.
The industry has grown quite well with millions of dollars being traded on decentralized exchanges and protocols daily. One major highlight of the DeFi space has been flash loan attacks. With flash loans, users can borrow loans without presenting any form of collateral.
Since this year began, there have been up to 10 flash loan attacks with the perpetrators carting away billions of dollars in crypto assets. The most recent attack was on the DeFi protocol, Impossible Finance (IF). Impossible Finance is a multichain DeFi projects incubator. IF faced the flash loan attack when the hackers had taken advantage of a vulnerability in the protocol to steal about $500,000 equivalent to 230ETH.
Drawing from the above, while DeFi offers irresistible perks, users have also been advised to do due diligence before investing on any projects. On the other hand, DeFi protocols are encouraged to work with smart contract audit firms like Certik to prevent the recurrence of attacks like the aforementioned in the future.
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