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DeFi Alchemix Protocol Suspends One of Smart Contracts

The developers of the decentralized lending platform Alchemix suspended the alETH smart contract due to an error that led to a lack of collateral in the liquidity pool in the amount of $ 6.53 million.

The Alchemix platform allows taking loans in cryptocurrencies against collateral, and collateralized tokens are placed in liquidity pools for profitable farming. The interest received from the invested funds can be used to repay the loan. However, due to an error in one of the smart contracts, users were able to withdraw their collateral without even paying the loan itself. Therefore, the pool was not sufficiently secured with collateral. Losses of the project amounted to $ 6.53 million.

“Due to a bug in the smart contract, alETH token holders received 100% of their ETH back. This was counted by the system as full payment of the loan, and therefore withdrawals were allowed. In general, the alETH pool was not sufficiently secured, ”said an anonymous researcher under the pseudonym FAANGanon, who works for Alameda Research.

For some time, no information was received from the Alchemix developers, but then they announced the suspension of the smart contract, and even later published an analysis of the situation. They urged the community to return the resulting errors to ETH. Also, the developers plan to temporarily increase the commissions in the protocol in order to cover the “cash gap” in the liquidity pool with the help of the profit received. In addition, part of the ETH will be moved from the project storage to the pool, and part of the DAO tokens will be sold to cover the damage.

Earlier on Bits.Media came out a large-scale material, which highlighted the main reasons for hacking DeFi projects and ways to avoid losing funds.

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