Value DeFi protocol hacker flooded with sob stories after returning $95K Dai

Published on by Cointele | Published on

On Nov. 14, an unknown party exploited flash loans via the decentralized finance protocol Value DeFi to the tune of $5.4 million.

According to data from Etherscan, the hacker sent $95,000 in Dai back to two of the victims who posted messages accessible in the Ethereum block explorer's input data on Sunday.

While the hacker did transfer 50,000 Dai to the nurse and 45,000 Dai to the 19-year-old, they had a message for both of them.

In the time since these messages were posted, many affected users have likewise sent small transactions with messages attached, requesting that the hacker make them whole again.

According to a post-mortem report from Value DeFi published on Sunday, the exploit began when a user took out a flash loan of 80,000 Ether - roughly $37 million at the time of publication - from lending protocol Aave in addition to buying 116 million Dai and 31 million Tether.

The attacker then swapped 25 million Dai for the protocol's dollar stablecoin mvUSD, 91 million DAI for USD Coin, and 31 million USDT for 17 million USDC. Each swap was designed to exploit the pricing used by Value's vault withdrawal method.

The protocol has stated it will be creating a compensation fund for affected users and has reached out to the hacker in a transaction of its own in an attempt to "Accelerate the process." Etherscan records show that Value DeFi offered a $1 million bounty for the hacker to return $5.4 million in Dai.

"All teams within this space are pioneering very risky technology that is by nature lacking the benefit of time for rigorous analysis and testing," stated Value DeFi.

"No matter if your funds are deployed in Value DeFi Protocol or any other DeFi projects, there is always an element of risk when it comes to smart contracts and increasingly complex deployments."

The value of the $VALUE token is $2.02 at the time of publication, having fallen more than 26% since its pre-exploit price of $2.74 on Saturday.