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Bounty Frenzy: KyberSwap Tempts Hacker with 10% Reward for $50M

Nov 25, 2023 at 08:13 am

In the aftermath of the significant breach that led to the misappropriation of $50 million on November 22 from KyberSwap's decentralized exchange (DEX), the decentralized autonomous organization (DAO) overseeing the platform decided to take proactive measures. Their response was to open a channel for negotiations with the elusive attacker.

Source: EtherscanSource: Etherscan

The DAO, reaching out to the assailant who had declared a temporary hiatus, expressed a willingness to engage in discussions. The attack specifically targeted KyberSwap's liquidity pools (LPs), resulting in a substantial impact on the decentralized exchange. Prior to the security breach, KyberSwap proudly reported a total value locked (TVL) of around $80 million. However, in the aftermath, the TVL plummeted drastically to a mere $7.78 million.

Recognizing the sophistication of the hack, the DAO, leveraging a message from a contract deployer wallet, commended the attacker's ingenuity in executing a high-expected value (EV) exploit that managed to evade detection by many. The DAO proposed a resolution: a bounty equivalent to 10% of the users' funds, taken during the hack, would be offered as an incentive for the safe return of all compromised funds.

KyberSwap, in a strategic move, set a deadline for the attacker to comply, scheduling it for November 25 at 06:00 UTC. This ultimatum aligns with a trend observed in decentralized finance (DeFi) hacks, where attackers use transaction signatures to taunt their victims. Additionally, it provides a platform for protocol teams to initiate negotiations with malicious actors.

The decentralized finance (DeFi) landscape has experienced a surge in cyber attacks, with DefiLlama reporting losses exceeding $290 million in exploits for the current month alone. The cumulative impact for the year reaches approximately $1.2 billion, underscoring the vulnerabilities and challenges faced by the DeFi sector. As KyberSwap anticipates a response to their negotiation offer, this incident further contributes to the evolving narrative surrounding the dynamics between DeFi platforms and the persistent threat of malicious actors within the cryptocurrency space.

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