Sovryn (SOV), a Bitcoin-Based DeFi Protocol, Suffers $1.1M Exploit, Funds Recovered

Sovryn, a project that aims to bring decentralized finance to the Bitcoin network, suffered a major exploit on October 5th.

Sovryn, a Bitcoin DeFi Protocol Suffers $1.1 Million Exploit, Funds Recovered

Sovryn (SOV), a project that aims to bring decentralized finance (DeFi) to the Bitcoin network, suffered a major exploit on October 5th, with a hacker stealing at least $1.1 million from the protocol.

Sovryn Suffers $1.1 Million Exploit

The Bitcoin-based DeFi protocol announced via a blog post that the project had lost $1.1 million in crypto (including 44.93 RBTC and 211,045 USDT) to an exploiter who took advantage of a legacy function of the project.

Sponsored

The Sovryn protocol is built on the Rootstock (RSK) blockchain. The attacker first bought wrapped RBTC (WRBTC) and then borrowed more WRBTC from Sovryn’s lending contract using his own XUSD (another stablecoin) as collateral. 

Sovryn wrote that “the attacker then provided liquidity to the RBTC lending contract, closed their loan with a swap using their XUSD collateral, redeemed (burned) their iRBTC token, and sent the WRBTC back to RskSwap to complete the flash swap.”

Using this process, the attacker was able to manipulate the iRBTC price such that he could withdraw far more RBTC from the lending pool than was first deposited. 

In an update, Sovryn announced that developers have been able to identify and recover at least half of the funds. They did so as the attacker attempted to withdraw the funds stolen from the exploit. 

On the Flipside

  • Sovryn clarified that user funds have not been affected by the hack and they are working to recover the entire funds stolen during the exploit. 

Why You Should Care

This is the first successful exploit of Sovryn after more than two years of operation, and the project is actively working to limit the damages.

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

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Milko Trajcevski

Milko Trajcevski is a DailyCoin news reporter, mainly focused on Ethereum (ETH), Cardano (ADA), and their founders (Vitalik Buterin and Charles Hoskinson). Milko is an avid follower of crypto and blockchain technology and has written thousands of articles on the subjects. He finds joy in transforming complex issues into written content that anyone can understand. Milko has used and analyzed numerous exchanges, such as Coinbase, FTX, and Binance. He also closely follows all of the latest news around the largest decentralized exchanges (DEXs). Location: Skopje, Macedonia