A security compromise occurred on Raft’s decentralized finance (Defi) platform on Friday, 10th November 2023. The Raft hack caused the Defi exchange to lose $3.3 million in ether (ETH). However, the attacker’s attempt to steal funds took an unforeseen turn, resulting in a net loss for them. According to on-chain statistics, the attacker took 1,577 ETH from Raft.

Only 7 ETH remained in the attackers’ possession after 1,570 ETH were transmitted to a burn address, effectively wiping off most of the stolen goods. Notably, the hacker’s address had acquired 18 ETH via the Tornado Cash crypto mixer service before the attack, which was most likely to be used for funding transactions.

The exploiter’s cryptocurrency wallet contained just 14 ETH once the transactions were completed and blockchain fees were paid; this indicates a 4 ETH loss for the entire transaction. Raft’s dollar-pegged stablecoin (R) sharply declined in the interim.

What Did the Raft Hack Cause?

Raft Hack Caused The Defi Exchange To Lose $3.3 Million in Ether (ETH)

In the immediate aftermath, the stablecoin saw a sharp decrease of up to 50% from its declared $1 value, but according to CoinMarketCap data, it eventually recovered to about 70 cents. Co-founder of Raft, David Garai, confirmed the attack by sharing the attacker’s methodology in a post on X (formerly Twitter).

He clarified that R tokens were first minted and sold to reduce liquidity in the automated market maker. Concurrently, the assailant removed support from Raft, executing a cunning plan.

Garai gave the community assurance following the incident that the team is actively working to reimburse impacted users. They want to use the protocol-owned sDAI in the Peg Stability Module. Raft is a DeFi lending platform that issues the R stablecoin, backed by liquid staking ether (ETH) variants, including stETH from Lido.

Through the locking up of ETH derivatives, users can manufacture R tokens. This incident was noteworthy since it was Friday’s second major crypto exploit; earlier in the day, another attacker had taken almost $114 million in digital assets from the centralized exchange Poloniex.

This event highlights DeFi platforms’ continuous difficulties in protecting their protocols from malevolent attackers.

More About Raft

Raft Hack Caused The Defi Exchange To Lose $3.3 Million in Ether (ETH)

Despite this setback, Raft’s proactive strategy of leveraging protocol-owned assets for payment shows a commitment to reducing the impact on affected customers.

Security concerns remain a significant problem in the larger context of decentralized finance. The Raft incident highlights the need for ongoing caution in the constantly changing DeFi market by drawing attention to potential vulnerabilities in smart contracts.

Platforms must prioritize strong security measures as the DeFi industry grows to safeguard user cash and maintain confidence in the decentralized ecosystem. Raft’s stablecoin saw a notable initial decline in value but later recovered, indicating some resilience in the DeFi market.

Notwithstanding, users and investors must exercise caution and remain knowledgeable about the security measures put in place by the platforms they engage with, given the dynamic nature of the cryptocurrency threat landscape.

In conclusion, events like the mentioned hack and stability concerns highlight the need for continuous improvement in security measures, transparency, and risk management within the DeFi sector. Participants in the space should stay informed, exercise caution, and be prepared for the evolving nature of decentralized finance.