Biggest hack in DeFi history takes a surprising turn

After persistent negotiations, the PolyNetwork hacker has now returned almost all of the stolen cryptocurrencies – what happened in the DeFi sector this week?

Despite the negative regulatory news from the US and several hacks, the DeFi sector currently only knows one direction – up. All cryptocurrencies contained in the “DeFi ETF Token” DeFi Pulse Index (DPI) have seen price increases this week. On a weekly basis, the token is up 17.95 percent and is trading at $ 412.87 at press time.

The top performers on the index this week included Badger DAO (BADGER), HarvesFinance (FARM) and SushiSwap (SUSHI). All three rose between 30 and 70 percent within the last seven days.

The Total Value Locked (TVL) of all DeFi applications on Ethereum also underlines this performance.

Since July 16, the capital in the smart contract has grown from under $ 60 million to $ 82.78 billion.

DAO Maker DeFi crowdfunding platform loses $ 7 million

Despite the name, DAO Maker (DAO) has no connections whatsoever with MakerDAO (MKR). DAO Maker is a crowdfunding platform that helps crypto projects raise money for their projects. Last Thursday, DAO Maker fell victim to a remote hack attack in which more than 5,000 user accounts on the crowdfunding platform were looted.

According to a medium post from DAO Maker CEO Christoph Zaknun, the hackers were able to steal almost 7 million US dollars in USD Coin (USDC) from 5,251 user accounts. By exploiting a bug in the smart contract programming, the attackers succeeded in stealing the funds. The DAO Maker team wants to suspend all payments to the platform until the cause has been completely analyzed.

In addition, the blockchain intelligence company CipherBlade was commissioned to conduct an investigation into the hack.

“Just kidding”: PolyNetwork hacker gives in

The PolyNetwork hack has been on everyone’s lips for the past few days. The project operates a platform that enables cross-chain transactions between Ethereum, Polygon and the Binance Smart Chain. A few days ago, a hacker managed to steal 611 million US dollars from the cross-chain platform.

PolyNetwork then spent almost a day negotiating with the hacker. Fortunately, he finally decided to return almost all stolen cryptocurrencies to PolyNetwork. You can find the full summary of the events here.

Now PolyNetwork is only $ 33.4 million short. That’s because this USDT immediately after the hack frozen that is: The company Tether Labs has blacklisted the hacker’s address and prohibited it from moving. Only when the security of the PolyNetwork is guaranteed will the USDT be released, says Tether CTO Paolo Ardoino.

In an onchain message, the team thanked the hacker for exposing the bug before saying they believed the action should be rewarded. They offered the hacker $ 500,000 and assured them that no legal action would be taken against him. But he refused.

Fewer hacks with increasing professionalization

Many are now probably wondering why the DeFi space continues to grow despite all the hacks and why investors still have confidence in the decentralized protocols. That’s because, compared to the overall size of the DeFi-Space, they’re just like a drop in a bucket. In total, there is more than $ 140 billion in the entire DeFi sector, according to DeFiLlama. However, DeFi applications are only as secure as their underlying code. Most of the hacks in the past few years have usually been due to major programming errors that allowed funds to be stolen.

Therefore, as the industry becomes more professional, it is likely that investors will learn to distinguish which DeFi protocols are secure and which are not. Since the entire code of decentralized applications is open source, anyone with the necessary know-how can theoretically check for themselves whether a DeFi protocol has gaps or not.

Institutionalization of the DeFi-Space is progressing

One example of the fact that DeFi heavyweights in particular are becoming more and more professional is the increasing range of products for institutional investors. The lending protocol Compound (COMP), for example, wants to start a project with “Compound Treasury” that is specially developed for companies and financial institutions. This should give institutional investors easy access to DeFi and invest their money profitably on Compound. The Aave lending protocol also wants to develop Aave Pro, a product specifically aimed at institutional investors.

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