This marks the third time that the Platypus Protocol, a decentralized finance (DeFi) platform, has experienced a security breach in 2023. Despite numerous updates in DeFi security, hackers continue to exploit the DeFi market, resulting in the theft of millions of dollars.
Multiple security breaches hit Platypus Protocol
Platypus Protocol, an automated market maker, suffered three security breaches in a single day, resulting in a significant loss of $2.23 million, as reported by the blockchain security firm Certik. On October 12, 2023, the first breach led to a substantial loss of $1.2 million from the protocol. Just an hour later, the second attack occurred, causing a loss of $5,785,000, and a minute after that, the last attack resulted in a loss of $450,000.
One of the major reasons for these attacks could be the automated market maker system of the Platypus Protocol, which enables digital assets to be traded automatically using liquidity pools, rather than relying on organic buyers and sellers.
The Platypus Protocol faced its first flash loan attack of 2023 on February 16, 2023, resulting in a loss of approximately $8.5 million. This attack also caused the Platypus stablecoin to de-peg, plummeting from $1 to $0.48. In July, the protocol experienced a similar flash loan attack, resulting in a loss of $157,000, as reported by Todayq News.
Flash loan attacks in DeFi
In a flash loan attack, traders may exploit a vulnerability that allows them to borrow cryptocurrency without providing collateral. As of September 2023, the total losses due to exploitations, scams, and hacks had reached a staggering $330 million. However, the overall crypto losses for 2023, resulting from scams, exploitation, and hacks, amounted to a staggering $1.34 billion.
According to the report by Beosin, in Q3 2023, losses reached nearly $890 million, surpassing the $663 million lost in Q1 and Q2 combined. This serves as a warning to crypto investors to exercise caution due to the ongoing security risks in the digital asset realm.