In a damning revelation of its security vulnerabilities, Balancer, an Ethereum-based DeFi protocol, confirmed a loss of nearly $900,000 on August 27 via its official communication channel, X (formerly Twitter).
Loss Unveiled: Balancer Falls Victim to Security Vulnerabilities
This shocking loss comes immediately following a warning issued by Balancer on August 22, acknowledging a vulnerability affecting several of its pools. Blockchain security expert Meier Dolev attributed the exploit to an Ethereum address that received two separate transfers of the stablecoin DAI, totaling nearly $900,000. Surprisingly, at the time of the vulnerability disclosure, only 1.4% of Balancer’s total assets – equivalent to over $5 million – were at risk. However, despite its mitigation measures, Balancer failed to pause the affected pools, leaving them vulnerable to attacks.
The Inability of Balancer to Protect Its Pools
Balancer’s situation worsened as its mitigation measures were unable to freeze the affected liquidity pools, leaving users’ assets vulnerable. The protocol initially advised its user base to withdraw funds from the liquidity providers (LP) and even halted some pools to prevent further damage. However, as of August 24, $2.8 million – representing 0.42% of Balancer’s total locked value (TVL) – remained at risk. Balancer urged users to exit the labeled ‘at-risk’ pools and migrate to the deemed ‘mitigated’ pools.