Largest DeFi Hack Yet? BadgerDAO Hack Results In Loss Of $120M+

There are high ceilings and low floors when it comes to crypto at times. Another hack came to life this week, and early reports have stated that the hack was a front-end compromise that led to users being tricked into approving unwanted transactions.

The news comes after a $35M DeFi hack of the Vee Finance protocol in recent months, and our team at NewsBTC reported around mid-year that crypto hacks and fraud were on pace for a record year.

This week’s BadgerDAO compromise is one of DeFi’s biggest yet.

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BadgerDAO Hack: What We Know

The protocol cited “reports of unauthorized withdrawals of user funds” on late Wednesday, and proceeded to pause all smart contracts on the protocol:

The BadgerDAO Token (BADGER), suffered a roughly 20% drop following the news of the hack. The platform is geared towards earning yield on bitcoin through various vaults.

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Blockchain auditing firm PeckShield reported in the early hours on Thursday that the loss was north of $120M, spanning across over 2 BTC and over 150 ETH and going all the way across. However, a variety of assets were compromised during the hack. There were several big wallet losses, including a $5M swoop in one transaction. PeckShield has also released a list of transactions of the hacked funds, but also in the early Thursday hours stated that it “look(s) like good progress has been made. Fingers crossed!”

All things considered, the BADGER coin has held up relatively strong in light of this week's hack. | Source: BADGER-USD on

Related Reading | Cardano Records Over 20 Million Transactions Ahead Of DEX Launches

Backlash & The Bigger Picture

As to be expected, the community reception to this news was less than ideal. Many Twitter replies from users noted their heartbreak from loss of funds. Some users even went on to suggest that the hack was a rug, given that it was seemingly a front-end attack.

Some further speculation came around a loss of funds from CeFi platform Celsius Network. However, thus far, the notes around Celsius seem to be only rumors with little substance. Only time will tell if more firm details come to light, or if Celsius makes a statement around the rumors.

Furthermore, many community members noted that the protocol “pausing” the smart contracts – as sensical as it is to protect user funds – goes against the principles of decentralization.

The continued emergence of insurance programs should bode well for DeFi in general. Our team at NewsBTC wishes only the best for the BadgerDAO protocol and it’s users.

Related Reading | Bitcoin And Omicron: Is Another Black Swan Brewing?

Featured image from Pexels, Charts from
The writer of this content is not associated or affiliated with any of the parties mentioned in this article. This is not financial advice.


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$120M Lost in BadgerDAO DeFi Hack

Key Takeaways

  • BadgerDAO has suffered a major frontend attack.
  • The hacker reportedly compromised Badger’s user interface by inserting a malicious script that prompted users to give the hacker permission to spend their funds.
  • Smart contract auditing firm Peckshield has estimated the value of the stolen funds to around $120 million.

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BadgerDAO, a DeFi protocol for earning yield with tokenized Bitcoin on Ethereum, has fallen victim to an attack. The hacker reportedly added a malicious script to the protocol’s frontend website, prompting users to approve a smart contract transaction giving the script unlimited permission to drain funds from their wallets.

BadgerDAO Suffers Frontend Attack

BadgerDAO, a DeFi protocol with over 30,000 active users and $1.2 billion in total value locked, has been exploited.

The attack occurred early Wednesday. Soon after, many affected users reported suspicious outgoing transactions from their wallets.

It’s suspected that the attacker exploited the protocol’s frontend website rather than its smart contracts. The hacker allegedly inserted a malicious script on Badger’s website that presented users with a transaction to “increase allowance,” which gave the attacker unlimited permission to drain the funds users had deposited in the vaults if they approved the transaction. 

BadgerDAO acknowledged the exploit earlier this morning. In a Twitter statement, the team confirmed that it had “received reports of unauthorized withdrawals of user funds.” The team has paused the project’s smart contracts and is currently investigating the issue. 

According to on-chain data, the exploiter contract was created on Nov. 20. It appears that the attacker waited until multiple users had approved the contract before beginning to drain the funds all at once this morning. 

Commenting on the exploit on the project’s Discord server, Badger core contributor Tritium wrote:

“It looks like a bunch of users had approvals set for the exploit address allowing [the address] to operate on their vault funds and that was exploited.”

Smart contract auditing firm Peckshield has estimated the total losses come to around $120 million. One user reportedly lost nearly 900 Bitcoin, currently worth around $50.7 million, in a single transaction. 

Some users reportedly became aware of the exploit as far back as five days ago and escalated the issue with BadgerDAO developers. The team, however, seems to have largely ignored the issue. A screenshot posted by the Twitter user DeFi Ahab shows that a Discord member going by the name fewture alerted the team to the “increase allowance” prompt, before Badger team member blackbear dismissed their concerns by saying it was most likely because “the UI got a bit bugged.”

Affected users have already created a Discord channel dedicated to tracking the hacker. The information posted suggests that the attacker made several transactions connected to the exploit that could be traced back to centralized exchanges with Know Your Customer (KYC) requirements. This would theoretically make the hacker easier to trace. 

Judging by recent comments in the Discord channel, community members and Badger core contributors are confident that they’ve already identified the attacker. Peckshield also appears to support this theory, tweeting that “progress has been made,” around the same time information linked to the alleged hacker started appearing in the channel.

DeFi has been hit other similar attacks in recent months, but this specific type of exploit, where the attacker has compromised a project’s user interface rather than its smart contracts, has rarely been seen on this magnitude. At $120 million lost, it’s one of the biggest DeFi hacks to date.

The project’s native token, BADGER, has been hit hard by the incident. It’s down 17.5% today, trading at $22.05 at press time.

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Nearly 1% Of Bitcoin Supply Is Now Wrapped In Ethereum

As wrapped Bitcoin approaches 189,000 BTC, the leading form of BTC on Ethereum now makes up for nearly 1% of the total supply of the cryptocurrency.

The total supply of WBTC was only around 4,000 coins last June, and today it is 47 times that. The gigantic growth has made the token the most popular form of Bitcoin on the Ethereum blockchain.

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WBTC touches the 1% mark | Source: Arcane Research

Overall, around 240,000 BTC has been tokenized into Ethereum protocols, of which 80% of the supply comprises of WBTC.

Why The Need For WBTC?

Tokenized BTC is becoming increasingly popular because the Bitcoin blockchain lacks some functionality that Ethereum does not.

As the Ethereum DeFi ecosystem is highly lucrative, it’s not surprising that investors are looking to get their hands on some of those yields.

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WBTC isn’t the only BTC token on Ethereum. HBTC and RENBTC are some of the other examples. However, only WBTC is noticing such massive growth.

Below is a chart that visualizes the difference between WBTC and other tokens:

WBTC runs away from the rest | Source: Dune Analytics

As is clear from the chart, the competition of the token is largely stagnant, and drastically lesser in circulation, making up for only 20% of the total BTC supply on Ethereum.

Related Reading | Privacy Protection: The Future of DeFi


BadgerDAO is a decentralized autonomous organization that aims to build the products and infrastructure necessary to bring Bitcoin as collateral to other blockchains.

BadgerDAO has played an important part in Wrapped Bitcoin’s rise above its competition. The platform currently has $632 million in tokens locked in.

There are 13 vaults (called “setts”) in total on the website where you can deposit your tokens. A lot of these setts are liquidity pairs of WBTC and some other token. As a natural consequence, not all the value is locked under the wrapped token.

Nonetheless, there is a WBTC-only sett that is powered by Yearn Finance. The vault is now the biggest one on the platform with about $200 million tokens deposited.

Badger offers quite low price-to-earning ratio | Source: BadgerDAO

The above chart is from a BadgerDAO report that shows that they have one of the lowest price-to-earning ratios when compared to other DeFI businesses.

Related Reading | Top 10 DeFi Projects in Q2 2021

Bitcoin Price

In the past 30 days, the value of the cryptocurrency has dropped by 14%.

However, the general trend seems to have changed towards up in this past week of June so far. Below is a chart showing the variation in the cryptocurrency’s value:

BTC seems to be on a slight upward trend | Source: BTCUSD on TradingView

As per a Voyager Digital survey, 87% of the respondents plan to buy more cryptocurrency in the coming months. 7 out of 10 respondents also believe market sentiment is bullish in the next three months.

However, other investors like Rich Bernstein feel that we are looking at a bearish market.


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¿Gaming for profit? This Ethereum based protocol enables it

Conceived as a bridge between Bitcoin and decentralized finance on Ethereum, Badger DAO protocol has expanded its investment strategies. As of today, users will be able to profit from yielding NFTs by participating in its new “game”.

Using one of Badger DAO’s products called Honeypot part I, participants can farm NFTs for staking bBadger or BAdger UNI tokens. Thus, they were allowed to obtain 1 of the 6 NFTs needed to get a prize of up to $30,000.

Now, the team behind the protocol launched “the most gamified experience to date”. Via a partnership with MEME, they have deployed Honeypot part II: Diamond Hands. With a mechanism intended to “level the playing field,” this second version of the product promises to deliver a portion of the prize to all holders of NFTs earned for playing.

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In addition, the longer a player takes to redeem his NFT for a share of the winnings, the bigger his loot will be. This mechanic is intended to incentivize greater player participation and make them seek more rewards for playing longer.

Adding the power on the more common cards makes it so that the later you are to redeem the higher portion of the pool you will receive (shout out to for the inspiration here). There is a massive disadvantage early but that dissipates as the final cards are being redeemed so, as they all become more scarce, the values of the different cards should converge.

Bitcoin on Ethereum and Binance Smart Chain

The tokens that participants receive have “Redemption Power” (RP). The more of this a user accumulates with their NFT, the greater their reward. BadgerDAO team member Jon Tompkins said:

Redemption Power (RP) = relative portion of the pool you can claim with an NFT.  The lower the better! At any point until the last is NFT redeemed, lower RP = larger portion of redemption pool As redemptions occur and all NFTs become more scarce the RP disparity shrinks.

To obtain the NFTs, users must stake bDIGG tokens at the time of launch. Participants with more bDIGG staked will have more chances to receive the NFT.

Badger DAO is a protocol that operates on Ethereum and Binance Smart Chain, its vaults allow users to mint synthetic versions of Bitcoin to offer liquidity and receive rewards. According to DeFi Pulse, Badger DAO is the 12th largest protocol by total value locked (TVL) and contains 9,177 BTC “locked” on its platform.

BADGER’s price, the protocol’s native token, shows significant losses all across the board. The lowest losses are registered on the last day with 2.9% and the most pronounced in the monthly chart with losses of 34.8%.

Ethereum ETH Badger DAO


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Wen? Now! BadgerDAO’s synthetic rebasing Bitcoin, DIGG, goes live

After weeks of anticipation and a closely-watched series of preparatory steps, BadgerDAO’s synthetic rebasing Bitcoin, DIGG, is now live and claimable for qualified addresses on Ethereum mainnet. 

The release will be eagerly welcomed by a perhaps-overzealous community, one which has been lighting up Twitter with “wen DIGG” for weeks. For all the memes and excitement, however, there’s some serious technical heft behind both the distribution and the maintenance of the newest Bitcoin asset on Ethereum.

Ultimately, however, now that DIGG is in the wild market forces are what will determine the long-term success of the synthetic Bitcoin asset — success that might not be assured.

Fair, flat launch

According to core BadgerDAO contributor and distribution architect Jon Tompkins, the amount of claimable DIGG for each eligible account was determined using a formula centered on an Ethereum address’ activity in the BadgerDAO app. Factors such as total native platform Badger tokens earned, the Badger earned to Badger staked ratio, and total stake days were taken into consideration. 

In order to prevent an overallocation to deep-pocketed “whales,” however, the DAO approved an application of a 1.75 root to smooth the distribution between addresses. As Tompkins wrote in the original DIGG distribution proposal, this root means that, while in a linear distribution the top 100 addresses would have been eligible to receive over 70% of DIGG, they instead will be able to claim just 33%.

Tompkins said that of the 600 DIGG tokens currently available the top address will receive 8.75 DIGG, while the average of the 8517 eligible addresses will be able to claim .07 of a token.

The goal of this distribution was to allow the project to “reward the little guys that are strong badger supporters but not fully disadvantage the whales,” said Tompkins.

Keeping a peg

Now that the token is live, the rebase games begin. 

Algorithmic stablecoins have been a hot topic in DeFi circles over the past few months as one of the most popular trading vehicles. The assets, which are primarily meant to track the price of the US dollar, have “rebasing” features that dynamically expand or contract the total supply of the asset based on preset parameters such as price or time.

So far, however, they’ve proven to be far more effective at enriching users who know how to play the rebase parameters than they’ve been at creating truly stable assets.

DIGG will be possibly the first-ever synthetic rebasing Bitcoin, and certainly the first to feature this distribution method. Out of the gate users will be able to stake their DIGG in a yield-bearing vault, use it to provide liquidity to DIGG/WBTC Sushiswap and Uniswap pairs, hold the core asset in anticipation of a positive rebase, or sell the tokens on the open market.

While there has been speculation as to how DIGG will perform and what the best strategies might be, it’s ultimately unclear to what degree the asset will be able to hew to its intended peg given BTC’s volatility and DIGG’s unique launch.

In a previous interview with Cointelegraph, BadgerDAO founder Chris Spadafora expressed hope that additional forthcoming stabilization mechanisms will be able to help DIGG better track BTC, however.

“What we want to do with our vault system is really at large-scale be the… let’s call it the ‘buy-and-sell’ dictators. So through automated strategies we’re able to buy when the time is right and sell when the time is right to optimize return for the users,” he said.

Forthcoming vaults designed to programmatically play the rebase games are designed to do just that, but given the uncharted game-theoretical landscape it’s impossible to say if the vaults will be sufficient to stabilize DIGG — or what happens after vault incentives dry up. 

In the end, after weeks of anticipation, instead of “Wen DIGG?” BadgerDAO participants lining up to take a spin at the latest rebase casino now must ask themselves, “What’s next?”