Balancer Publishes Post-Mortem Analysis on Hack

Balancer, a leading decentralized finance (DeFi) protocol, has released its report on the recent exploit that drained millions of dollars from its Composable Stable Pool (CSPs) across multiple blockchain networks. 

Details on Balancer’s Report

According to the report, the protocol pinpointed a rounding flaw in its swap logic as the cause of the incident. This flaw enabled attackers to distort token swap calculations. This way, the hackers could drain liquidity from CSPs without triggering standard protections. 

Notably, Balancer explained that the vulnerability was limited to CSPs, which use a special method to keep prices stable and maintain liquidity efficiently. Other Blanacer pool types, such as weighted and boosted pools, were not affected.

Balancer also mentioned that the exploit was not due to a major design flaw in its v2 protocol. However, it is worth noting that the developers are doing every possible to recover funds. 

Recall that the Balancer’s team issued a statement confirming it was collaborating with top blockchain security researchers to investigate the incident. Hence, the team offered a 20% bounty to the individual or group behond the hack as an incentive for the safe return of the remaining funds.

Effect of Balancer Hack on the Crypto Market

A few days ago, the decentralized finance platform confirmed a large hack that stole over $129 million in crypto assets. The attack hit several networks, including Ethereum, Base, Optimism, Polygon, Sonic, and Berachain. In the immediate aftermath of the exploit, the Bera Foundation announced that validators had deliberately halted the Berachain network.

The foundation assured users that the network will resume operations only after the recovery of affected funds. 

Meanwhile, the Balancer hack shook the market, causing major price drops. BAL, Balancer’s native token, fell more than 10%. BERA, Berachain’s token, also dropped 7% to $1.69, while trading volumes jumped by over 90% as investors reacted to the news.

Similarly, the wider market was also affected, with liquid staking tokens like LDO, JTO, and RPL seeing sharp declines. Ethereum (ETH) also fell by 4% in 24 hours to about $3,686, as of the day of the hack.

StakeWise Recover Funds After Balancer Exploits

StakeWise, a DeFi protocol, managed to recover $19.3 million worth of osETH, part of the funds stolen from Balancer. 

The recovery marked a significant relief for the protocol and its users. On-chain data revealed that StakeWise recovered 5,041 osETH tokens through a contract call, cutting the stolen amount from $117 million to $98 million.

Investigations found out that the hacker has slowly converted liquid staking tokens into Ethereum. Reportedly, more than half of the stolen funds have already been transferred to the Ethereum network.