In the latest security breach event, the decentralized finance (DeFi) project Onyx Protocol became a victim of flash loan exploitation and lost approximately $2.1 million worth of Ethereum (ETH) coins.
To commit the theft, the attacker initiated their scheme by making a seemingly innocuous donation of a small sum to the oPEPE market. With this initiative, they were eligible to borrow a substantial amount of funds from other markets that possessed ample liquidity. The donated funds were utilized as collateral for the borrowing process. After that, the attackers then redeemed the borrowed funds and exploited the rounding issue to make a profit.
The theft was easy as the oPEPE market was set up 5 days ago and didn’t have any funds, which turned out to be an advantage for the attackers. In detail, the attacker created a flash loan of 4,000 ETH from Aave, an open-source liquidity protocol, and swapped it to the meme coin, PEPE, before the exploitation of the oPEPE smart contract on Onyx.
The Onyx Protocol Community leader Alex confirmed the theft and said the team has now closed the vulnerability and is working to proceed further. Taking to the X platform, formerly known as Twitter, Alex said they are aware of the problem and working to proceed further.
This incident is the latest in a series of crypto exploits, highlighting the vulnerability of the decentralized finance space. Recently, Hundred Finance also reported a similar instance of exploit, in which it experienced a significant security breach on the Ethereum layer-2 blockchain Optimism, resulting in losses close to $7.4 million. Additionally, the monthly report from CertiK Alert reveals that crypto enthusiasts lost a combined total of over $32 million due to exploits, hacks, and scams in October.
The Onyx Protocol security breach serves as a reminder of the ongoing risks associated with decentralized finance. As the popularity of DeFi continues to grow, it is crucial for projects to prioritize security measures and stay vigilant against potential exploits. Users should also exercise caution and conduct thorough research before participating in DeFi platforms. By staying informed and taking necessary precautions, the crypto community can work towards a safer and more secure decentralized financial ecosystem.
