Over the weekend, the largest hacking of 400 billion won occurred in DeFi. DeFi refers to blockchain-based finance.
Due to the nature of DeFi, which creates additional value by using collateral, related coins plunged nearly 20% in a row as concerns over a series of liquidation grew.
On the 20th, AAVE is trading at $91.39 on Binance, the world’s largest virtual asset exchange. This is a 20.43% drop in price since the hacking occurred on the 18th.
Abe’s plunge was due to the fact that the takeover of RsETHs, which occurred in the Depi-Protocol Kelp DAO, had a profound impact on Abe.
Depay gives you a certificate when you deposit a coin. You can deposit this certificate somewhere else and raise your profits by receiving interest.
Kelpdao is a protocol that issues the certificate, rsETH, when Ethereum is deposited in a deposit certificate. It is a kind of secondary loan platform.
In this case, the hacker seized a large number of these rsETHs and made a final exchange from other DeFi to ETH. In other words, they took the bonds and turned them into high-quality assets.
Hackers were able to do this due in particular to structural problems in the DeFi system, which used blockchain to advocate the next generation of the International Interbank Communication Association (SWIFT).
Originally, when transferring assets between blockchains (e.g., Ethereum to Tron), it moves through bridges because the chains are different from each other and cannot be transmitted directly.
If you leave Ethereum to Bridge, Bridge prints the security certificate at Tron.
Layer Zero works in the form of direct photography rather than bridges through a technology called OFT. Incineration of Ethereum and minting that amount of Tron. In the meantime, a ‘message’ is sent to inform whether it is incinerated or minted.
The concept of sending a message was modeled on the way Swift made international remittances between banks.
The problem is that the Layer 0 system did not discern the fake message. The hacker found a vulnerability in the OFT and sent a false message to Kelpdao, who was using the OFT service, to print rsETH.
Since then, rsETH has been entrusted to Aave and ethereum has been borrowed to convert it into cash.
Therefore, rsETH has already been printed out and turned into a bad bond, and Abe and others took over large-scale bad debts because they received it and paid Ethereum.
As concerns grew due to the decline in the credibility of Layer Zero, the bankruptcy of Calpdao, and Abe’s insolvency, the market plunged by 15% of ZRO and 17% of AAVE, while Etena and Stargate, which use OFT, also fell.
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