StakeWise Recovers $19.3M After Balancer Exploits

StakeWise, a decentralized finance (DeFi) protocol has managed to recover $19.3 million worth of osETH, part of funds stolen from Balancer earlier this week. 

The recovery marks a significant relief for the protocol and its users after the security breach drained over $100 million from Balancer’s vaults and liquidity pools.

StakeWise and Fund Recovery Progress

Recent onchain data shows that StakeWise recovered 5,041 osETH tokens through a contract call, cutting the stolen amount from $117 million to $98 million. 

Investigations found that the hacker had been slowly converting liquid staking tokens (LSTs) into Ethereum (ETH). Reportedly, more than half of the stolen funds have already been transferred to the Ethereum network.

The Balancer attack on November 3 targeted the platform’s Version 2 vaults and liquidity pools. The attack exploited a flaw in how the platform’s smart contracts interacted during pool setup. This lets the hacker take control of vault calls and make unauthorized swaps and balance changes within minutes.

Balancer Hack Exposes DeFi Security Gaps

Security firms PeckShield and Nansen later confirmed that the breach was a technical exploit rather than a private key compromise. 

The coordinated assault siphoned between $110 million and $116 million across multiple networks, including Ethereum, Base and Berachain, which immediately suspended its network to contain damage.

Experts believe Balancer’s design made it easier for the hacker to take advantage of connected smart contracts. Meanwhile similar issues have been seen in other trading platforms in the crypto industry. This incident shows the need for stronger security between linked contracts.

Following the attack, data from DeFiLlama showed that Balancer’s total value locked (TVL) has plummeted sharply. It has fallen from $442 million to $214.5 million within 24 hours of the incident, more than half of its on-chain liquidity. The platform’s native token, BAL, also fell by 8% over the same period, adding to broader market losses. 

This comes as the global crypto market capitalization is facing pressure, dropping to a five-month low of $3.45 trillion. The two top coins Bitcoin (BTC) and Ethereum have declined by 18% and 27% respectively over the past month.

Balancer Offers 20% Bounty to Recover Stolen Funds After Hack

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

While the full details of the attack are still being reviewed, Balancer has promised to release a full report after the investigation is finished. StakeWise’s recovered funds show Balancer’s progress in containing the damage from the exploit.