Crypto Lending Platform Euler Finance Loses $197 Million in a Flash Loan Attack
Euler Finance is a non-custodial DeFi protocol operating on the Ethereum blockchain. This project recently suffered from a massive hack attack. The media reports have revealed that the attack has resulted in the loss of $197 million worth of cryptocurrencies.
These figures are also confirmed by cybersecurity firm BlockSec which is working on the case in tandem with PeckShield. Euler is a decentralized lending protocol and it has suffered from the flash-loan attacks.
It is worth mentioning that flash loans are a special type of lending mechanism that is specific to DeFi. The diagnosis of the incident has revealed that the attack started by borrowing a massive amounts of funds from the protocol.
As the result, they were able to drain $136 million in staked Ethereum, $19 million in wrapped Bitcoin, $34 million in USDC, and $8.7 million in DAI. The details about the siphoned cryptocurrencies are added in a report published by BlockSec.
Euler labs have suffered from a flash loan attacks. These types of attacks allow hackers to manipulate the liquidity available in different DeFi protocols. Flash loans are based on smart contracts and they offer the option to the investors to make quick and risk-free loan transactions.
The investors may only be able to carry out their flash loan requests if their calculations are met. Otherwise, these requests are declined. This type of loaning mechanism removes risks and other lending hassles for DeFi investors.
Therefore, Flash loans have gained considerable popularity among investors. However, threat actors might be able to exploit flash loan smart contracts if they can find technical blind spots. In the case of Euler Finance, the same seems to be the case.
The fact that anyone can initiate a flash loan request without needing any type of collateral opens them to considerable vulnerability. The only risk that the borrower has to deal with using flash loans is repaying the loans in the smallest possible time frame.
Crypto Investors Want Secure DeFi Protocols
When it comes to flash loans, investors tend to pick projects that have goodwill in the market. The reason that hackers were able to siphon millions of dollar worth of cryptocurrencies from the Euler protocol is the fact that it was operating on the Ethereum network due to the trust among investors regarding its technical soundness and standardized construction.
Euler enables lending and borrowing services using the decentralized autonomous organization or DAO model. It makes this organization an automated entity that was able to raise $32 million in funding during an event that was headed by Haun Ventures last year. As a result of the attack, Euler native currency EUL prices have dipped more than 45% moving from $6.10 to $3.30.
