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Yield Protocol, a lending platform developed on the Arbitrum blockchain, has suffered a security breach, causing a stir in the Decentralized Finance world.
Yield Protocol, a defunct decentralized finance (DeFi) lending protocol, was hacked by unknown attackers who managed to drain approximately $181,000 worth of crypto assets by exploiting smart contracts present on the Arbitrum blockchain.
Following the wind-down of the Yield Protocol in December 2023, the protocol advised investors to close their positions, withdraw funds, and pay off any pending loans, citing an inability to keep up with the lack of business demand and global regulatory pressures.
Rising Scams In The Crypto World
Although scams in the crypto community are not new, they have increased recently. Impersonators have been detected attempting to exploit crypto users and take advantage of current trends, such as the meme coin frenzy. On the other hand, scammers have targeted various personalities and projects, from virtual artists to L2 NFT-focused blockchains and liquid re-staking protocols.
With the recent launch of the Solana-based meme coin Slerf, impersonators created an account pretending to represent the project’s team. However, the accidental burn of the Liquidity pool (LP) and Presale airdrop SLERF tokens resulted in the loss of over $10 Million raised by the presale participants.
In February, an unauthorized user breached MicroStrategy’s X account, resulting in the theft of approximately $440,000 worth of cryptocurrency.
Although there were more phishing victims in February than in January, the overall amount stolen was less than the previous month. Additionally, February saw a significant decrease in the number of victims who lost over $1 Million.
Moreover, in recent months, Compound Finance, Rocket Pool, Blockchain Capital, and even Vitalik Buterin have had their X accounts infiltrated by crypto phishers.
Hackers Drained Funds Despite The Warning
Despite the warnings, hackers managed to drain funds from Yield Protocol’s strategic contracts by exploiting a discrepancy between the pool token balance and total supply with flash-loaned assets and then withdrawing extra pool tokens. Blockchain investigation firm PeckShield was the first to report about the hack, which was later confirmed by CertiK.
On February 2, official support for Yield Protocol came to an end. Despite previous instances of recovery, the likelihood of retrieving the stolen funds seems low.
In 2023, Yield Protocol was one of 11 decentralized finance protocols that experienced losses due to an attack on the noncustodial lending protocol Euler Finance. By July of that year, Yield Protocol had completely bounced back from the Euler flash loan attack
Yield Protocol collaborated with Euler to recover the funds. This involved creating 26 new contracts and making approximately 300 permission calls to reset the maturity of the fixed-yield tokens and restore the protocol to its original state. Blockchain security firm Immunefi recently reported a 23% decline in losses due to hacking and scams in the first quarter of 2024 compared to 2023.
Conclusion
Yield Protocol advised investors to withdraw funds due to the lack of demand and global regulation. Crypto scams are increasing, with hackers exploiting virtual artists and specific blockchain protocols. PeckShield discovered that hackers drained funds from Yield Protocol’s contracts.
Disclaimer
The views and opinions stated by the author or any people named in this article are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading in stocks, cryptos, or other related indexes comes with a risk of financial loss.
Amanda Shinoy is one of the few women in the space invested knee-deep in crypto. An advocate for increasing the presence of women in crypto, she is known for her accurate technical analysis and price prediction of cryptocurrencies. Readers are often waiting for her opinion about the next rally. She is a finance expert with an MBA in finance. Quitting a corporate job at a leading financial institution, she now engages herself full-time into financial education for the general public.
