There is continuing talk about the decentralized finance revolution, but this time in a negative form.

After the value of cryptocurrencies locked in DeFi applications rose to $1.65 billion, 65% higher than the figure recorded two weeks ago, so too did the number of users taking advantage of decentralized applications such as Compound, Maker and Synthetix.

Unfortunately, however, a hack has occurred that may temporarily slow the growth of DeFi.

A hacker managed to steal $500,000 of Ethereum through a DeFi application:

Early this past Sunday afternoon, some reports began circulating across social media indicating a hack and attack on a DeFi application.

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The process first appeared on Telegram, according to Mr. Stephen Zing of The Block:

An official at one Telegram group noticed a problem with Balancer, a DeFi protocol focused on facilitating token swaps.

Apparently someone drained the Balancer Pool which consists of WETH and STA and got $500,000 worth of WETH tokens.

Hours after Zeng tweeted, the attack was confirmed by 1inch decentralized exchange platform Mike MacDonald, co-founder of Balancer Labs.

Balancer Labs is behind the development of Balancer, an Ethereum-based protocol.

according to what I told Its “1inch” platform:

Over $500,000 in Ethereum and other altcoins were spent during this attack.

The research conducted by the platform “1inch” found that the attacker used a smart contract to manipulate the “Balancer Pool”, and the result of the search came as follows:

This money was used to swap WETH to STA back and forth 24 times which depleted the STA balance from the Balancer Pool.

Every time the attacker switched WETH to STA, the Balancer pool got 1% less STA than expected.

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After that, the Ethereum user benefited from draining the Ethereum, Bitcoin, Synthetix, and Chainlink present in the pool.

As stated in the title, the value of the stolen funds is approximately $500,000.

What helped this hacker steal is the STA’s algorithm designed to ensure that 1% of the amount transacted for each transaction is destroyed.

1inch has categorized this hacker and attacker as a highly sophisticated smart contract engineer with extensive knowledge and understanding of leading DeFi protocols, as shown by his methods and tricks.

The attacker has yet to be identified because he used the Ethereum mixer to obscure his identity and his links to the exchanges.

Larry Sukernick, an investor in the Digital Currency Group, stated that DeFi products are too complex for their own good, telling:

A high IQ can be counterproductive to building highly successful products.

You get people with big minds that need work.

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And when they are operational, the result is often a complex and beautiful product that is not widely used.

He explained that a lot of that is in the DeFi space now.

while look Joseph Todaro from BlockTown Capital takes a different view of the decentralized finance market, stating:

If fees go up or stay high, I would expect Ethereum competitors to focus on scalability to see increased interest in their products.

Read also:

The Compound project is now leading the DeFi market

Balancer Coin Rise 230%… Is It Time for Decentralized Finance (DeFi)?