- Hackers stole almost $200 million from Euler protocol on Monday.
- USDC accounted for a majority of the stolen tokens.
- Euler Labs is currently working to recover the funds.
Euler protocol is facing a different threat from the crypto firm collapses, crypto lawsuits, and crypto-related bank shutdowns that have plagued the crypto space in the recent past.
The small-cap Ethereum-based decentralized finance lending protocol was on Monday hacked leading to the loss of crypto assets worth nearly $200 million.
Euler flash loan attack
Blockchain security firm PeckShield on Monday tweeted notifying Euler to take a look at some fishy transactions from its platform.
Hi @eulerfinance: you may want to take a look: https://t.co/L7ddZhHNq5
— PeckShield Inc. (@peckshield) March 13, 2023
Looking at the transactions from Euler on etherscan, the hacker(s) took off with a variety of cryptocurrencies including 34.4 million USDC, 8.89 million DAI, 85,690 stETH, and 849 WBTC.
According to a tweet from SlowMist, another blockchain security firm:
“The attacker used flashloans to deposit funds and then leveraged them twice to trigger the liquidation logic, donating the funds to the reserve address and conducting a self-liquidation to collect any remaining assets.”
Euler Labs, the startup behind Euler Protocol, has however said that it successfully stopped the exploit and it is currently working to recover the stolen funds in collaboration with a number of firms including Chainalysis.
An update on our work today to recover funds for Euler protocol users.
Here are a few actions we took immediately:
1. Stopped the direct attack as soon as possible by helping disable the EToken module, which blocked deposits and the vulnerable donation function
2. Engaged TRM… https://t.co/6ZClE9uGoH
— Euler Labs (@eulerfinance) March 14, 2023
Euler’s native token, EUL, down 52%
The native token of Euler, EUL, dived by more than 52% following the revelation of the exploit.
At press time, the token was trading at $3.08 down from a high of $6.4826 on Monday morning. And although the token price seems to have consolidated above $3, it is not certain if the token will be able to hold that level seeing that it had dipped from its attempt to recover after the fall.
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On Thursday, the price of EUL token, the native token of the Euler protocol, plunged about 52% after an exploit was discovered in the Euler protocol’s smart contracts. The exploit, which allowed attackers to mint an estimated 990 million EUL tokens, caused a loss of $200 million worth of the EUL token.
The Euler protocol is a decentralized, high performance and secure DeFi protocol. It has gained traction due to its integration with Polkadot, bringing interoperability to the DeFi space.
The announcement of the exploit was made early on Thursday through an official blog post. According to the blog post, the exploit was first discovered late Wednesday evening by security researchers. The Euler protocol’s development team quickly launched an investigation and identified the exploited code. The code was then patched and deployed onto the mainnet to secure it from further attacks.
Despite their swift response and the securing of the code, the damage was already done. EUL tokens were already being illicitly minted and transferred. The team noted that nearly half of these false EUL tokens were already on the open market.
The Euler protocol team is confident that the issue has been resolved and that the EUL token is secure. They also noted that the governance DAO is reviewing the situation and will discuss the best options to resolve this incident. These options may include a chain reorganization, but the team is still exploring available options.
The news of the Euler protocol exploit has dealt a severe blow to investors and users of the EUL token. Its price has dropped by more than 50% in only 12 hours. The team has urged investors to exercise caution and not rush into any decisions, as they are working diligently to resolve the exploit.