September 28, 2021

Finance Redefined: One hack to bring down a whole market, Feb 10–17

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Finance Redefined is Cointelegraph’s DeFi-centric newsletter, delivered to subscribers every Wednesday.

The Alpha Homora and Cream Finance hack has made a gigantic mark in the DeFi space this week.

It is the largest single hack in DeFi history at $37 million in funds stolen. It is also one of the most complex, apparently leveraging several honest-to-God vulnerabilities in Alpha Homora. A few missing input checks in very specialized conditions allowed the hacker to abuse Alpha Homora’s privilege of borrowing an unlimited amount of funds from Cream Finance’s Iron Bank. Flash loans were of course involved, but unlike some previous hacks like Harvest Finance, this doesn’t seem to have been a purely economic exploit.

News of the hack had a very negative impact on prices for all the protocols involved in the hack, including Aave for some reason. Looking more generally at the DeFi Perp on FTX, there is a clear peak right on Feb. 13 when the hack happened.

FTX’s DeFi index, courtesy of TradingView

Perhaps some of that is just normal market action, but overallTitle: Finance Redefined: One hack to bring down a whole market, Feb 10–17
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Published Date: Thu, 18 Feb 2021 10:16:44 +0000