Sunday, June 23, 2024

How did Cream Finance lose $130 million?

Cream Finance, the DeFi protocol, has fallen prey to yet another hack in 2021. This time, the protocol suffered losses worth $130 million. As far as thefts go in the world of DeFi, this is one of the largest. The Ethereum-based protocol was attacked by a flash-loan transaction.

This isn’t the first time that flash loan transactions have been used to carry out attacks in the DeFi sector. The ever-growing DeFi sector is seeing millions coming in and hackers are keeping a close watch on protocols that have loopholes in their security features.

Cream Finance has already faced two similar attacks – one in February and another in August. The February attack set Cream Finance back by $38 million. In August, the protocol lost another $19 million. However, the attacks on Cream Finance pale in comparison to what was suffered by PolyNetwork, which lost $600 million in August.

The co-founder and CEO of FRNT Financial Inc., Stephane Ouellette, said that the recent attacks highlight three big risks in the DeFi sector. According to Oulette, the first risk is that new and emerging tokens are being traded at inflated valuations. The second, according to Oulette, is the unproven technology that lies at the core of DeFi platforms that aren’t even a year old. The third is the impending regulations on protocols like Cream Finance.

On 27th October, not long after the attack, the value of Cream’s token dropped by 26%. It’s the lowest the token has been since its late plummet towards the end of May 2021.

Cryptured Team
Cryptured Team
The writers team at Cryptured.com is composed of passionate and experienced journalists who cover the latest developments in the crypto and blockchain space. They aim to provide accurate, unbiased and easy-to-understand news and information for their readers, as well as insights and analysis from industry experts. The writers team is always on the lookout for new and exciting stories that can help the general public learn more about the potential and challenges of these technologies.
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