Feb 20, 2023

DeFi Firm Platypus Unveils Compensation Plan After $8.5M Flash Loan Attack

Decentralized finance (DeFi) firm Platypus is working on a plan to compensate users for losses incurred after a flash loan attack drained nearly $8.5 million from its protocol. The attack impacted the stablecoin dollar-peg of Platypus USD (USP).

In a tweet on Feb. 18, Platypus said it was working on a plan to compensate the damages and asked users not to realize their losses in the protocol, as this would make it harder for the company to manage the issue. Asset liquidations have also been paused, said the protocol.

Different parties, including legal enforcement officials, are currently involved in the funds’ recovery process. Further details about the next steps will be disclosed soon, noted Platypus.

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.

Blockchain security firm CertiK first reported the flash loan attack on the platform through a tweet on Feb. 16, along with the alleged attacker’s contract address. Nearly $8.5 million was moved from the protocol, and as a result, the Platypus USD (USP) stablecoin depegged from the U.S. dollar, dropping to $0.33 at the time of writing.

The attack was made possible by incorrectly placed code after it was audited. Auditing company Omniscia revealed the attack was made possible by incorrectly placed code after it was audited. Omniscia audited a version of the MasterPlatypusV1 contract from Nov. 21 to Dec. 5, 2021. The version, however, “contained no integration points with an external platypusTreasure system” and therefore did not contain the misordered lines of code.

Flash loan attacks are a type of exploit that target 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 now working to develop a comprehensive NFT marketing strategy to help promote the platform and attract more users. This includes creating a web3 agency to help them with NFT promotion, as well as using Twitter NFT marketing to reach a wider audience. The firm is also exploring ways to sell NFTs to generate more revenue for the platform.

Platypus is also taking proactive steps to prevent future attacks. The firm is working on a comprehensive security strategy to ensure the platform is secure and stable. This includes regular security audits and implementing additional safeguards to prevent malicious actors from exploiting the platform.

Going forward, Platypus is committed to providing a secure and reliable platform for its users. The firm is working to ensure the platform is safe and secure, while also providing users with the best possible experience when using the platform.

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