Feb 20, 2023
DeFi Firm Platypus Devises Compensation Plan for $8.5M Flash Loan Attack
Crypto firm Platypus is taking steps to compensate users for losses incurred in a flash loan attack that drained nearly $8.5 million from the protocol and affected its stablecoin dollar-peg. The attack was first reported by blockchain security firm CertiK on Feb. 16, along with the alleged attacker’s contract address.
In a tweet on Feb. 18, Platypus said it was working on a plan to reimburse the damages and asked users not to realize their losses in the protocol. The firm added that asset liquidations have been paused, and different parties, including legal enforcement officials, are currently involved in the funds’ recovery process. Platypus said that more details about the next steps will be disclosed soon.
Part of the funds are locked up in the Aave protocol. Platypus is exploring a method to potentially recover the funds, which would require the approval of a recovery proposal in Aave’s governance forum.
The flash loan attack was made possible by incorrectly placed code, according to a post-mortem analysis conducted by auditing company Omniscia. The audit was conducted on a version of the MasterPlatypusV1 contract from Nov. 21 to Dec. 5, 2021, and the version “contained no integration points with an external platypusTreasure system” and therefore did not contain the misordered lines of code.
The flash loan attack exploits the smart contract security of a platform to borrow large amounts of money without collateral. Once a cryptocurrency asset has been manipulated on one exchange, it is quickly sold on another, allowing the exploiter to profit from the price manipulation.
Platypus is working to mitigate the effects of the attack by implementing a comprehensive compensation plan and exploring a method to potentially recover the funds. The company is also looking to capitalize on the current situation by launching a NFT marketing campaign to promote their platform. Platypus is hoping to leverage Twitter and other social media platforms to reach a wider audience and increase awareness of their platform.
The firm is also in the process of setting up a NFT marketing agency to help other crypto projects with their NFT marketing efforts. The agency will offer a range of services, including NFT promotion, NFT marketing, and selling NFTs. Platypus is hoping to capitalize on the current NFT craze and position itself as a leader in the web3 space.
The attack on Platypus has highlighted the importance of security in the crypto space. It has also highlighted the need for projects to take extra steps to ensure their protocols are secure and to audit their code regularly. Platypus is hoping to use its experience to help other projects protect themselves from similar attacks.
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