Feb 20, 2023

Platypus Working on Compensation Plan After $8.5M Flash Loan Attack

Crypto firm Platypus is working on a plan to compensate users for losses incurred following a flash loan attack on their platform. Platypus is a decentralized finance (DeFi) firm that offers a stablecoin pegged to the U.S. dollar, Platypus USD (USP). The attack drained nearly $8.5 million from the protocol, leading to the USP depegging from the dollar and dropping to $0.33.

In a tweet on Feb. 18, Platypus asked users not to realize their losses in the protocol and also announced that asset liquidations had been paused. The firm said that different parties, including legal enforcement officials, were involved in the funds’ recovery process and further details would be disclosed soon.

Part of the funds are locked up in the Aave protocol and Platypus is exploring a method to potentially recover them, 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.

Flash loan attacks exploit 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. Omniscia audited a version of the MasterPlatypusV1 contract from Nov. 21 to Dec. 5, 2021, which did not contain the misordered lines of code.

Platypus is now working with NFT marketing and promotion agencies to help them recover from the attack. The firm is looking to use a combination of Twitter NFT marketing, web3 agency services, and NFT promotion services to help them reach a wider audience and spread awareness about the attack.

The firm is also looking to explore ways to sell NFTs to help them generate revenue and recuperate some of their losses. Platypus is hoping that by leveraging the power of NFTs and the web3 space, they can help them recover from this attack and continue to provide their users with a reliable, secure, and stable DeFi platform.

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