While our achievements as a society will always remain unmatched, it shouldn’t mean that human beings are just perfect to the core, because in reality, we are not. This is something we have learnt time and time throughout our history, and during some instances, those reality checks have even left an indelible on the world. Hence, to protect ourselves against such occurrences, the world would develop certain avenues over time. Now, all these avenues did boast some unique elements in their own right, but notably enough, none of them managed to muster up an impact as big as technology did. Right from the get-go, technology was the most ingenious human brainchild. The same was evident in whatever it was doing across the board, as soon we became a wholly tech-driven generation. However, even though this revolution elevated us beyond all limits, technology, like us, would prove to have its own shortcomings, with one of them talking at length to security. You see, by bringing the world together, the creation also exposed our vulnerabilities, and that will cost us dearly. An iteration of the said risk was on full display after a recent cyberattack.
Beanstalk Farms, a decentralized finance (DeFi) project aimed at balancing the supply and demand of different cryptocurrency assets, has officially confirmed that it was hit by a cyberattack, which resulted in $182 million worth of cryptocurrency getting stolen. According to certain reports, the hacker made it possible through the exploitation of Beanstalk’s majority vote governance system. The stated governance mechanism allows participants to vote collectively on stuff like changes to the code. Nevertheless, another important detail here is that these voting rights are distributed as per the amount of tokens held by a participant. So, when the hacker used Beanstalk’s Flash Loan feature for borrowing over $1 billion, he was suddenly in a position to buy 67% of the voting rights. As you can guess, this gave him the ultimate power to approve a code which will bridge the final gap and transfer all the funds to his wallet. If further details are to be believed, the whole process was completed within a mere 13 seconds.
“DAO governance is currently trending in DeFi. While it is a necessary step in the decentralization process, it should be done gradually and with all the possible risks carefully weighted. Developers and administrators should be aware of new points of failure that can be created by developers or DAO members intentionally or by accident,” commented Brian Pasfield, CTO at cryptocurrency lending platform Fringe Finance.
Considering the Beanstalk project was developed without any VC, a bailout looks unlikely at the moment.