Feb 20, 2023

Platypus Develops Compensation Plan After $8.5M Flash Loan Attack

Crypto firm Platypus has revealed details of a compensation plan to help users affected by a recent flash loan attack. The attack, which drained nearly $8.5 million from the protocol, caused its stablecoin dollar-peg to de-peg from the U.S. dollar.

In a tweet on Feb. 18, Platypus asked users not to realize their losses in the protocol, saying this would make it easier for the company to manage the issue. Asset liquidations have also been paused.

Platypus said different parties, including legal enforcement officials, are involved in the funds’ recovery process. Further 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 first reported by blockchain security firm CertiK in a tweet on Feb. 16. The 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.

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

Platypus is now working on a plan to compensate users for their losses. As part of the plan, the firm is exploring ways to recover the funds locked in the Aave protocol. It is also exploring NFT marketing and promotion strategies to help users sell their NFTs.

The company is also considering working with a web3 agency and a Twitter NFT marketing agency to help promote the sale of NFTs. Platypus is confident that the compensation plan and NFT marketing strategies will help users recover their losses and get back on track.

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