bZx Network Hacked for $55M

Key Takeaways

  • DeFi protocol bZx has been hacked for upwards of $55 million.
  • The team has not released details concerning how the attack was executed.
  • A post-mortem is expected in the coming days.

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bZx, a widely-used DeFi protocol, has lost $55 million to an unknown hacker who it claims gained illegitimate access to its private key. It is still not clear how the hackers carried out the attack.

Hacker Drains Funds After Compromising Private Key

bZx, a multi-chain decentralized finance (DeFi) project, has reported that a private key securing its smart contracts on Polygon and Binance Smart Chain (BSC) was compromised.

“It appears private key controlling the Polygon and BSC deployments was compromised, leading to loss of funds,” the team confirmed in a Twitter post.

After the private key compromise, an unknown hacker successfully drained $55 million worth of assets from its liquidity pools, security firm Slow Mist estimates.

Roughly 25% of this amount was lost from the wallet, the team claimed, and the remaining belonged to its users. To prevent further losses, the team has asked its users to revoke permissions they have given to the affected contracts.

The team added that its Ethereum smart contract was not affected by the hack. The reason for this was that the private key to bZx’s Ethereum deployment was secured by a multi-party contract and governed through a DAO.

The team is yet to explain how hackers stole the private key controlling its Polygon and BSC contracts. It is expected to present a post-mortem report in the coming days.

It is noteworthy that bZx was attacked last year as well. Later, the team claimed to have recovered the funds at the time. Incidents like the bZx hack are not an uncommon occurrence for projects building on Binance Smart Chain and Polygon; both EVM-based blockchains have registered several attacks over the last year.

Today’s bZx attack adds to the long list of on-chain hacks that have previously taken place on Polygon and BSC. The biggest among them was Poly Network, a cross-chain DeFi project similar to bZx, that suffered a $611 million hack.

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DeFi Protocol bZx Sheds Light on Its Binance Smart Chain Journey So Far

Decentralized finance (DeFi) protocol bZx, has revealed via Twitter on April 19, 2021, that since launching its margin trading and lending product on the Binance Smart Chain (BSC), its total value locked (TVL) has increased significantly and it’s now looking to build upon that success with its cross-chain governance token, BGOV.

bZx Aiming for the Top  

Despite being hacked on three separate occasions and suffering major losses, decentralized finance protocol bZx is not giving up on DeFi. Instead, the team remains determined to play a key role in the ecosystem via its lending and yield farming products.

On March 17, 2021, bZx announced the launch of its margin trading, lending and borrowing products dubbed Torque and Fulcrum on Binance Smart Chain (BSC), in a bid to expand the reach of its decentralized investment products while still focusing on Ethereum.

In addition to rolling out Torque and Fulcrum on Binance Smart Chain, bZx launched a new BEP20 token called BGOV, which the project says is a fork of the Sushiwap (SUSHI) token contract and will enable its users to “explore new ways to incentivize liquidity, create yield farms and receive rewards.”

Taking Over Multichain DeFi 

According to a Twitter thread by bZx, its journey on Binance Smart Chain has been smooth and exciting so far, as the total value locked in its network reached $1 billion just one week after going live on BSC. 

“A week after launching on BSC, bZX reached a $1 billion TVL. Shortly thereafter, a massive $70m loan was issued resulting in a record-breaking $200k in fees accruing to BGOV pool stakers in less than 24hrs,” tweeted bZx.

Notably, bZX says its users can generate yield with their BZRX tokens on BSC by simply wrapping their BZRX and vBZRX tokens via the Binance Smart Bridge and stake them on BSC to earn BGOV tokens.

Interestingly, bZX claims BGOV comes with several advantages and unlike the existing BZRX token, the former does not have a fixed supply.

“BGOV will be used to govern Binance Smart Chain protocol parameters for Binance specific assets on bZx. Users will be able to stake their BGOV tokens and earn a portion of protocol fees, and submit governance proposals for Binance Smart chain protocol-specific assets,” bZX wrote.

At press time, the price of bZx (BZRX) sits at $0.7468, while vBZRX is trading at $0.3234, as seen on CoinMarketCap.

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CipherTrace Report: DeFi Protocol Hacks Contributed Majorly to 2020’s Crypto Thefts

The DeFi summer of 2020 witnessed ‘rug-pulls’ left, right, and center.

DeFi Landscape Saw Major Crypto Thefts

Blockchain technology and cryptocurrency analysis firm CipherTrace recently released the 2020 Cryptocurrency Crime and Anti-Money Laundering Report.

The report posits that while 2019 and 2020 both saw a similar number of thefts, hacks, and frauds, the average value taken by cybercriminals in 2019 was about 160 percent higher than in 2020. This signifies a significant development for the cryptocurrency industry in terms of mature security mechanisms in place to safeguard investors.

As previously reported by BTCManager, 2020 witnessed the high-profile hack of cryptocurrency exchange KuCoin with hackers duping exchange users to the tune of $280 million worth of digital assets.

However, in November, the exchange cleared the air by saying it had retrieved 84 percent of the funds stolen from the platform.

Another important finding in the report speaks about the numerous but relatively smaller in size DeFi ‘rug-pulls’ that dominated the mid-year DeFi bull market in 2020. Close to 50 percent of crypto hacks in 2020 were related to DeFi protocols while nearly 99 percent of major fraud volume in the second half of 2020 could be attributed to the infamous ‘rug-pulls.’

What is a Rug-Pull?

For the uninitiated, these so-called rug-pulls are similar to the countless scams witnessed during the 2017 ICO euphoria. A rug-pull is similar to a pump and dump whereby a few investors liquidate their entire DeFi pool, subsequently leaving the remaining token holders with either no liquidity or tokens that are almost worthless in terms of value.

A total of 18 protocols were assaulted in 2020 which, according to CipherTrace, is testimony to “the most DeFi hacks in a year to date.” One of these was the attack on bZx protocol as reported by BTCManager where the hacker or group of hackers was able to steal more than 2,378 ether worth $645,000 at the time.

In similar news, BTCManager reported in July 2020 how major DeFi protocol Balancer found itself on the receiving end when hackers were able to exploit the platform and steal more than $500k worth of altcoins from its Statera (STA), and STONK (STONK) lending pools.

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