Decentralized finance (DeFi) protocol Balancer suffered a flash lending attack on August 27, 2023, losing $870,000 in assets.
Flash loan attacks are a form of arbitrage attack that exploits shortcomings in DeFi protocols. In this case, the attackers obtained a loan of $870,000 in USDC from Aave, a DeFi lending platform. They then used these funds to buy WBTC and yWBTC tokens on Balancer.
The attackers then exchanged WBTC and yWBTC for USDC on Curve, another DeFi exchange. This allowed them to make a profit of $20,000. The attackers then repaid Aave's loan, pocketing the profit.
The attack was discovered by Balancer's security team, which took steps to protect the protocol. Balancer has also announced that it is working on security improvements to prevent future attacks.
This attack is a reminder of the risks of decentralized finance. DeFi users should be aware of the risks of flash lending attacks and take steps to protect themselves.
Here are some tips to protect yourself from flash loan attacks:
Only use DeFi protocols that have been audited by a reputable security company.
Use a cold wallet to store your DeFi funds.
Don't invest more than you can afford to lose.
Users are advised to remove affected LP immediately.
