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Last Sunday, a hacker exploited a new algorithmic stablecoin project called Beanstalk and drained it of $182m worth of digital assets. The Beanstalk hack was the fifth-largest crypto theft on record and the WSJ explains how they did it. The Beanstalk hack follows a $540m theft last month from the platform for the online game Axie Infinity.
Most of the hacks have taken advantage of faulty code, according to Chainalysis. In fact, the exact method that the Beanstalk hacker used has become a common one, the firm said. The Beanstalk protocol used what’s called a DAO, or decentralized autonomous organization. Users can dedicate, or “stake,” funds to the project, which gives them a vote in governance and changes to the protocol. According to blockchain-analytics firm Elliptic, the hacker borrowed about $1 billion worth of different stablecoins, using an ultra-short-term kind of loan called a flashloan, and then added that to Beanstalk’s funds. That was enough to give them an overwhelming percentage of voting power. Once they stole the funds, they repaid the loan, and pocketed the difference.
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