ThorChain And The $8 Million Hack – What Happened?

ThorChain recently suffered an attack where a hacker commissioned a custom contract to trick ThorChain’s Bifrost Protocol and caused it to receive fake assets in deposit. This marks the second incident on ThorChain, only that this time it cost them up to $8 million.

In late July, the first incident occurred when the ThorChain protocol lost approximately 4000 ETH on an entirely different attack. The ThorChain network initiated a refund to the hacker in response to the incident, compensating the supposed fake assets with real ones.

Several blockchain security companies have come forward to audit the network and identify the bugs set by the hackers. The attacks left the ThorChain network with minimal options. However, its treasury stepped in to compensate the network and ensure that it did not suffer a liquidity problem following the drain.

The Hack

ThorChain is a cross-chain decentralized exchange that has again fallen victim to a white hat hacker.

In a statement released by the network, the hacker demanded a ten percent recompense. Following the attack, operations on the network had to be halted temporarily to facilitate the auditing of the code. The treasury funds belonging to this particular project were used to subsidize all the liquidity providers affected by this attack.

According to the perpetrator, they made a conscious minimization of the damage from the attack to educate the network. In the hacker’s own words, “Stop rushing code that can control up to nine figures.”

They also cautioned the network to disable its operations until auditing had been finalized. The hacker demonstrated their ability to easily steal ether, Bitcoin, Binance Coin, and other BEP-20 tokens.

According to their expert opinion, several loopholes were evident, and a ten percent bug bounty would have been able to keep the incident from happening.

ThorChain exchange network is currently amidst a staged beta launch (Chaosnet). Being a protected launch, Chaosnet makes it possible for cross-chain swapping across different tokens, including but not limited to Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and Binance chain networks.

Because of its premature standing, the network acknowledged that the complex nature of its state machine is made up of the Achilles’ heel of ThorChain. Despite the detrimental outcome, the network remains positive that with so many more experts, and with the expert help of a re-think in software developer, the code would be understood and corrected.

The Battle Between Crypto Platforms and Hackers

Undoubtedly, the battle between smart contract security companies against hackers remains on the list the agenda. Decentralized finance (DeFi) is constantly growing, which will eventually necessitate more airtight solutions. A recent report by CipherTrace indicated that DeFi-related crimes had hit a seven-month high.

Almost every month, a cybersecurity attack will hit a crypto or DeFi platform, causing devastating losses. A few weeks after the ThorChain attack, Poly Network was the victim of one of the largest cryptocurrency heists where $600 million was stolen. Whilst some of the funds were returned by hackers, the incident shed more light on the vulnerability of DeFi.

This makes it appear as if hackers are steps ahead of the crypto firms they attack. Among other attacks, incidences of ransomware, malware, and DDoS have increasingly become prevalent and have put companies at very serious risks.

There exists a lasting battle between Cybersecurity specialists and hackers. While technology is developed to prevent the most current attacks, new attacks are constantly being invented with the very same technology.

The new attacks crash the new technology, creating a vicious cycle. Therefore, it requires a unique integration of the ideal tech, ideal regulations, and cybersecurity researchers to continue learning the ropes.

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