Although decentralized finance (DeFi) has been billed by many to be the future of money, the persistently demonstrated vulnerability of DeFi protocols has put a sizable dent in the image of the nascent sector.
A week after it was reported that Qubit Finance had lost $80 million in a hack, network bridge protocol Wormhole becomes the latest victim in an worryingly increasing trend of DeFi hacks.
Wormholes Lose $320 Million to a “Solved” Problem
Wormhole is a communication bridge network between Solana, Ethereum, and other top decentralized finance (DeFi) networks. The protocol currently has an over $1 billion TVL.
On February 2nd, at 9:42 PM, the Wormhole team announced that its network was temporarily down for maintenance as they were looking “into a potential exploit.”
Two hours later, the Wormhole team announced that the hacker had made away with 120,000 wrapped Ether (wETH) worth approximately $320 million, making it the second-largest DeFi hack to date.
On the Flipside
- Wormhole has pledged to add ETH to its pool to ensure that wETH is backed one-for-one, and to get the network back up. The protocol tweeted:
The wormhole network was exploited for 120k wETH.— Wormhole🌪 (@wormholecrypto) February 2, 2022
ETH will be added over the next hours to ensure wETH is backed 1:1. More details to come shortly.
We are working to get the network back up quickly. Thanks for your patience.
According to reports, the network vulnerability which led to the funds being stolen from Wormhole had been identified on January 13th, and on January 16th, the team reported that they had fixed the vulnerability by pushing out updated code on Github.
Following the hack, Paradigm security researcher “samczsun” revealed that the Wormhole team has reached out to the hacker’s address on the Ethereum network, offering a $10 million bounty in return for the stolen funds.
Why You Should Care
The continuous exploits of DeFi protocols have served to validate claims that the security of DeFi is yet to reach a level fit to accommodate the huge sums being stored within them.