$43 Million: Investors Withdrew 200,000 ETH from DeFi Projects after bZx Exploits

Francisco Memoria

Cryptocurrency investors have moved about 200,000 ether out of the decentralized finance space shortly after a hacker used flash loans to attack the bZx lending protocol.

According to data from DeFi Pulse, about 3.03 million ETH were locked in the decentralized finance space before news of the attack started circulating. Shortly after, a sharp drop ensued and the total amount of ETH locked went to a 2.785 million low before it started recovering.

eth locked in defiSource: Defi Pulse

As CryptoGlobe reported bZx suffered two attacks that saw hackers take out flash loans – loans taken and paid for in the same transaction – to make a profit. In the first attack a loan of 10,000 ETH was taken on dYdX and half was sent to Compound and half to bZx. With one half the hacker borrowed 112 wBTC tokens, and with the other entered a short position for 112 wBTC on bZx. Using the funds he had on Compound, he lowered the tokens’ price.

The second attack saw a hacker take a 7,500 ETH flash loan to use half to buy sUSD and to take out a loan with larger collateral on bZx. Using the funds, the attacker bought more sUSD on Kyber and Uniswap to drive the stablecoin’s price up to $2. The attacker then paid out the loans and ended up with a profit of 2,378 ETH.

The funds appear to have been withdrawn from the DeFi space after the second attack. Earlier this week investors seem to have regained confidence as the amount of ETH locked in the space is now at 2.85 million once again.

A total of 40,00 ETH were locked on bZx before the second attack occurred. At press time, 17,500 ether remain on the decentralized finance platform. It’s worth noting investors also withdrew from Maker, the protocol behind the DAI stablecoin, after the attacks. Maker has around 57.2% of the total value locked in the decentralized finance space.

Earlier this month CryptoGlobe reported that over $1 billion worth of cryptocurrency were locked in the space. Given the flash loans were used to exploit a protocol in the same and that the price of most top cryptocurrencies dropped, the value has dropped to $938 million at press time.

Featured image via Pixabay.