DeFi protocol Balancer asked liquidity providers to immediately remove their liquidity from some pools due to a security issue.
In a Jan. 6 Twitter thread, the DeFi protocol revealed that the affected liquidity pools were DOLA/bb-a-USD on Ethereum, It’s MAI Life and Smells Like Spartan Spirit on Optimism, bb-am-USD/miMATIC on Polygon, and Tenacious Dollar on Fantom. Cumulatively, these pools contain $6.3 million worth of digital assets.
IMPORTANT: Due to a related issue, LPs of the following pools should remove their liquidity as soon as possible as the issue cannot be mitigated by the emergency DAO. https://t.co/WcBeBvjdY2
— Balancer (@Balancer) January 6, 2023
Balancer didn’t reveal the issue but promised to make it public later. The DeFi platform said its protocol fees were zeroed by the emergency multisig to help mitigate the issue.
Since Balancer does not specify the issue, the crypto community has speculated as to what could be wrong. Given Balancer’s status as the 4th largest decentralized exchange, any exploit could significantly impact the space.
In the meantime, this isn’t the first time Balancer has come under threat of exploitation. In 2020, Balancer lost $500,000 to a hacker who exploited two liquidity pools.
The balancer’s BAL price development is not affected
Balancer’s native token BAL does not appear to be affected by the protocol exploit threat. According to CoinMarketCap data, BAL is up 0.62% at $5.35 at press time. However, trading volume fell by about 7% during this period.
Source: CoinMarketCap
Defillama data shows that the balancer DEX had a trading volume of $92.21 million over the past 24 hours and nearly $350 million in January so far. The TVL of the protocol is US$1.5 billion.
Exploit of DeFi protocols
Malicious players attacked multiple DeFi protocols in 2022. In July, reports revealed that hackers had stolen over $2 billion from the crypto industry. BeInCrypto reported that the number had grown to $3.9 billion, citing data from bug bounty platform Immunefi.
Meanwhile, blockchain security firm Certik said December 2022 saw its lowest monthly number of stolen cryptos. According to the company, only $62 million was stolen that month. The firm reportedly predicted that the industry would see more hacks and exploits in this new year.
Disclaimer
BeInCrypto has reached out to companies or individuals involved in the story for an official statement on recent developments, but has yet to receive a response.
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