bZx Hack: Blockchain Security Firm, Litecoin’s Charlie Lee Weigh In
The bZx glitches that resulted in a hacker exploiting the platform up to the tune of $350,000
The issue, according to the firm is “likely exploitable in a number of similar settings (particularly with margin trades or borrows).” The firm says the exploit, is technically “original”. The attack, as analyzed by PeckShield is an interesting one that employs a combination of features like flashloan, margin trade, and pump-and-dump, and made possible through the current shared composable liquidity model. The 5x margin trade gives room for a large volume of tokens with relatively low cost and the shared liquidity. This the analysis avers contributed to the pump-and-dump scheme from one DeFi project to another.
Litecoin’s Charlie Lee Weighs In
Litecoin creator, Charlie Lee, upon hearing about the exploits, said it was one of the reasons he never trust DeFi. Claiming DeFi is not decentralized, Charlie Lee said most DeFi can be shut down by a centralized party and hacks on cannot be undo or exploited unless more centralization is added. He said: “This is why I don’t believe in DeFi. It’s the worst of both worlds. Most DeFi can be shut down by a centralized party, so it’s just decentralization theatre. And yet no one can undo a hack or exploit unless we add more centralization. So how is this better than what we have now?”
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