SafeDollar Price Plummets To Zero Following New DeFi Attack
According to a statement released on its Telegram page, SafeDollar (SDO), an algorithmic decentralized finance (DeFi) stable coin based on Polygon, is the latest DeFi to be hit by an exploit.
In the incident, attackers exploited a vulnerability to mint 831 quadrillion stable coin units. They then sold off the inflated supply in the liquidity pools, causing a total price collapse.
How Did the Cyber Attack Occur?
Stable coins are cryptocurrency tokens whose values are attached to specific cryptocurrencies, commodities, or fiat currencies such as the U.S. dollar, and are therefore intended to constantly have their values tally with their corresponding assets.
SafeDollar is meant to be safe, to be stable, and is supposed to be equal to $1 at all times. At press time, however, one SafeDollar token (SDO) trades for less than $0.5. Following its cyberattack on Sunday, the price of SafeDollar tanked to hit rock bottom.
SafeDollar's Twitter information page did not give any updates, but according to smart contract security project, RugDoc, attackers siphoned roughly $248,000 in USDC and USDT. The transaction can be viewed on PolygonScan.
It seems that the attacker hit SafeDollar with an infinite “Mint Exploit”, where the coin’s reward mechanism was gamed by withdrawing and depositing a small number of tokens in a loop, before spoofing the algorithm into awarding a very large reward.
Afterwards, the reward was withdrawn in $202,000 USDC along with $46,000 in USDT. And although SafeDollar had a market cap of around $248 million, its exit liquidity was only around $250,000.
The released statement declared that all activities on the platform were to be put on hold as an investigation was underway; it also said that compensation would be offered to its liquidity providers.
"SafeDollar is under attack," it said. "We are suspending our activities at SafeDollar and investigating the issue.
Important: Please suspend all transactions related to $ SDO. After the investigation, we will publish a post-mortem analysis."
The project’s team has said that it was not responsible for the attack, and has confirmed its plans to return with a post-mortem report.
Recurring DeFi Attacks
The latest hack would be the second attack on SafeDollar alone within a week. On June the 20th, its IDO vault was compromised for $95,000. SafeDollar’s team, however, quickly assured that its protocol was functioning as usual and was not necessarily affected by this incident. With more than thrice the same figure lost this time, and considering the proximity and severity of attacks, there are increasingly more reasons to worry.
SafeDollar’s attack is also the umpteenth in the string of attacks against DeFi platforms and dApps in recent times. Within the past months, Binance Smart Chain has recorded the most attacks to its apps. Popular DeFi platforms like Pancake Bunny and BeltBUSD have all been victims of successful hacks this year. Yesterday’s exploit would be the first major successful attack on the Polygon chain.
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