According to blockchain cybersecurity company CertiK, a floan loan attack on the Avalanche blockchain resulted in the theft of $370,000 in USDC from a smart contract and multiple liquidity providers.
The company stated in a tweet that it believes its decentralized exchange Trader Joe, staking platform Nereus Finance, and automated market maker Curve Finance have all been disrupted.
In a flash loan exploit, a malicious actor often obtains uncollateralized cash through a lending protocol and manipulates the price of an asset to raise its worth. This is an abuse of a smart contracts security.
Due to the nature of a flash loan, after the attacker has successfully arbitraged the asset, they sell back the borrowed funds in the same transaction and keep the profit.
The attack, which took place on Tuesday at 3:26 p.m. ET, was detected by CertiK’s on-chain security software Skynet, which constantly monitors and posts public suspicious smart contract data.
As is typical in most instances utilizing flash loan attacks, the identity of the attacker is still unclear.
Layer-1 smart contract platform Avalanche, developed by Singapore-based Ava Labs
Layer-1 smart contract platform Avalanche, developed by Singapore-based Ava Labs, has gained notoriety in recent years after rising to the top 20 cryptocurrencies in terms of market cap.
The Avalanche network, which works with Ethereum, has a decentralized application ecosystem as well as staking initiatives thanks to its proof-of-stake consensus mechanism.
Prior high-profile cryptocurrency heists with flash loans included the third-largest of 2022, in which DeFi dapp Beanstalk lost $182 million.
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