DeFi Specialist Beanstalk Farms Loses $184 Million in Hack
Table of Contents
- By Steven
- Published: Apr 22, 2022
- Last Updated: Apr 22, 2022
Beanstalk Farms, one of the DeFi industry’s most promising businesses, was recently hacked. DeFi is short for decentralized finance. Beanstalk Farms is considered one of the industry’s top credit-based protocols. Let’s look at how the hack occurred and why it is so significant to this emerging industry.
How was the Attack Performed?
The digital attack on Beanstalk Farms occurred using a unique strategy in which the company’s vote governance system was carefully exploited. The hackers behind the Beanstalk attack used a flash loan procured through Aave. Aave is a decentralized protocol. The nuanced approach resulted in the accumulation of the voting rights necessary to loot a significant amount of money. More than $180 million was stolen from the DeFi company in only a couple of seconds.
Why is the Hack of Beanstalk Farms Important?
Until recently, the companies that comprise the DeFi industry were perceived as somewhat impenetrable in terms of digital security. DeFi companies were held in high regard as they are staffed by tech gurus who understand the subtleties of digital security. However, now that Beanstalk Farms has been hacked for such a significant amount of money, there is some question whether the DeFi industry is nearly as secure as most originally assumed.
Why was Beanstalk Farms Targeted?
There is a general assumption that the hackers responsible for the attack zeroed in on Beanstalk Farms as it greases the wheels of the cryptocurrency system. Beanstalk Farms makes it easier for crypto supply and demand to level out through the exchange of currencies on its platform.
What is Beanstalk Farms’ Voting System All About?
The company’s voting system is central to its recent exploitation. Beanstalk Farms’ developer, Publius, developed the vote governance system so that relevant parties could easily cast their votes on code. Each participant’s voting rights are determined by the number of tokens owned.
The digital attack on Beanstalk occurred through the aforementioned flash loan. Flash loans are products provided by DeFi companies such as Beanstalk in which money is lent to customers for a brief period of time. Once the customer receives the loan, the hacker uses the sum for “Beans” that empower them to establish a majority stake. At this point, the hacker is provided with the password necessary to transition the money to a private digital wallet.
How Did Beanstalk Farms Respond to the Hack?
Representatives from Beanstalk Farms indicate they offered the hackers payment equating to 10% of the stolen funds. However, the payment will only be processed if the hackers return 90% of the stolen money to Beanstalk Farms within the designated timeframe.
The specifics of the timeframe for repayment have not been publicly revealed. Furthermore, Beanstalk Farms’ brass has indicated the hackers must return the bulk of the stolen money to the company’s multi-signature digital wallet to receive the 10% bounty. No other form of payment will be accepted.
The hack of Beanstalk Farms is a testament to the merit of updating essential digital protections that safeguard computers and networks. If your business or home computer lacks updated digital protection, seize the opportunity to heighten your defenses as soon as possible.
