Zabu Finance has suffered its first major hack attack in the Avalanche ecosystem, with the perpetrators draining more than $3.2 million.
September 13, 2021, | AtoZ Markets – On Sept 12, industry resource DeFiPrime tweeted that Zabu Finance, a decentralized finance (DeFi) protocol, had been exploited for $3.2 million in what could be the first major attack on Avalanche.
The developers of the protocol confirmed the hack attack, and also explained that the funds was stolen from the SPORE pool.
“No Zabu has been sold from the Zabu team wallet. We were hacked, possibly through the Spore pool. We are investigating the incident. Help is needed,” reads the tweet.
In addition, the team explained that the hacker used a tax transfer mechanism to issue new tokens, which subsequently led to a collapse in their value. The attacker exploited a vulnerability in a smart contract that is used by profitable farms to distribute rewards. According to PeckShield, a cybersecurity company, this bug has been encountered many times.
The Zabu Finance team explained that the attacker interacted with the contract to remove 4.5 billion ZABU tokens and credit itself to the liquidity provider tokens on other decentralized exchanges in the Avalanche Pangolin and Trader Joe ecosystem.
When it became clear that Zabu farms had been hacked, the developers set the reward to zero so that users could withdraw money. The team plans to take a snapshot of the network before the hack, and also asks for help from those who bought tokens after the hack.
The victims will receive ZABU v2 tokens, and the farm will be restarted in the second version. Zabu v1 staking pool will remain for those who came after the hack.
“This way, people who lost money before the hack will be compensated and will be able to maintain the protocol further if they want to. Those who bought after the hack will be able to switch to the V2 farm with coins purchased from the first version (Zabu V1) staking pool.”
ZABU token price drops after hack
The removal of such a number of ZABU tokens led to a collapse of prices to a level close to zero. According to CoinMarketCap, on Sunday they were on sale at $0.004, and today the price is trading at $0.000024.
Zabu Finance is yet another controversial DeFi protocol hit by a hack in 2021. At the end of August, hackers stole $4.5 million from the xToken protocol. According to the DeFiYield database of destroyed projects , users have lost $1.7 billion over the past five years due to similar hacks, fraud and theft.
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