According to DeFi security firm BlockSec, Fei Protocol and Rari Capital are the latest victims of a cybersecurity attack that resulted in more than $80 million in losses.
On Saturday, BlockSec tweeted that its monitoring system detected the exploitation of multiple streams connected to a decentralized finance protocol that exploits a reentrancy vulnerability.
Shortly thereafter, Fei Protocol confirmed the attack, quickly suspending all lending functions to mitigate further damage. The protocol also offers a $10 million bounty to the hacker if he chooses to return the stolen funds.
What is a fly agreement?
The Fei Protocol is an algorithmic stablecoin protocol that uses a Protocol Controlled Value (PCV) model to govern its USD-pegged stablecoins.
While this model removes the risk of a death spiral or seigniorage, anything that affects PCV assets could affect the peg. The peg fell 0.4% after Saturday’s announcement and is now at $0.9982 on CoinGecko.
On the other hand, Rari Capital is a permissionless lending protocol that allows users to create Fuse pools where they can offer and borrow ERC-20 tokens. Last year, Fei Protocol and Rari Capital merged with strong support from both communities. The purpose behind the merger is to further guide the liquidity of the Fuse pool, with FEI providing the necessary initial liquidity.
BlockSec further shared a snapshot of the attack, showing that the hackers stole the crypto assets in Wrapped ETH. For now, it’s likely that the hackers won’t accept Fei Protcol’s offer, given that funds have already been laundered through Tornado Cash.
With this attack, the amount of money lost to crypto breaches continues to grow this year and could surpass 2021. More than $1 billion was stolen in the first quarter of this year, including Axie Infinity’s record high of more than $6 million. The attack came a month after Axie Infinity announced it had been hacked, the same week that several DeFi protocols, including Deus DAO and Saddle Finance, lost millions of dollars to the breach.
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