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Poly Network - The Largest Hack in DeFi History

Some thoughts on the Poly Network hack - over $600 million stolen

Fabian Klauder

Aug 13, 2021

Hey DEFI TIMES community,

The news broke on Tuesday! Poly Network suffered one of the largest hacks in DeFi history. Over $600 million disappeared and tens of thousands of users lost access to their funds!

An incredibly tragic event. But what exactly happened?

Poly Network essentially lets users swap and transfer tokens across different blockchains. Poly Network operates on the Binance Smart Chain, Ethereum, and Polygon. Tokens are transferred between those blockchains via token bridges. One of these token bridges had a critical bug, which allowed the hacker to remove funds from the token pool!

Hacks like this happen on a regular basis in DeFi. But don’t get me wrong! This is a severe hack and we are talking about hundreds of millions of dollars here!

Some influential people in the crypto space were affected by this!

Boxmining @boxmining

1) So I'm a victim of the @PolyNetwork2 hack - it can potentially be a significant amount of my ETH/ BTC/ USDC savings. I'm probably still in the denial phase. It seems at this point there isn't much I can do other than to sit on my hands.

Of course, Poly Network reacted quickly and urged the hacker to return the funds.

Poly Network @PolyNetwork2

And apparently, they succeeded - at least partially!

On Wednesday morning, $4.8 million had been returned to the Poly Network addresses. A little later, about $258 million had been returned.

On Thursday, the hacker transferred nearly all of the remaining funds to a multi-sig wallet, which is controlled by Poly Network and the hacker. The only remaining funds are USDT tokens, which were frozen by Tether - immediately after the hack!

It was a terrifying story - with a good outcome! But the good thing is that we now have another valuable piece of information to build better protocols.

We are still very early… especially when it comes to interoperability solutions!

My biggest learning from the hack was the following:

The incident really shows the need for standardized token bridges - IBC is a great step in the right direction!

Jim Yang ⚗️ @proofstake

Your ERC-20 token is safe when secured by the Ethereum chain, but while your token is in transit, sitting on a poorly designed ETH-bridge, your token is no longer secure. @cosmosibc token transfer protocol enforces the original chain as the primary custodian at all times.

Boxmining @boxmining

4) Unfortunately for me, the failure happened on the ETH bridge - and the funds were on ETH. So whilst @Wing_Finance was not hacked, my savings have been stolen nonetheless. Assets such as pUSDC have value because there should be $1 USDC backing it on ETH. Now it's probably 0.

And as long as we don’t have battle-tested token bridges, we are going to see hacks!

Let’s hope for the best, but one thing is for sure…

The Poly Network hack was not the last one!

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Kevin O’ Leary joins FTX

DEFI TIMES @defitimes

.@kevinolearytv has signed a multi-year deal with FTX to become an FTX Brand Ambassador!

defitimes.io“Shark Tank’s” Kevin O’Leary Becomes FTX Brand Ambassador - DEFI TIMES“Shark Tank” host Kevin O’Leary has signed a multi-year deal with FTX to become an official spokesperson for the U.S.-based crypto exchange.

Star investor and “Shark Tank” host Kevin O’Leary has signed a multi-year deal with FTX to become an official spokesperson for the U.S.-based crypto exchange.

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DEFI TIMES @defitimes

VanEck Files for #Bitcoin Strategy ETF! 🚀 defitimes.io/news/vaneck-fi…

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VackEck has filed for another Bitcoin ETF: The Bitcoin Strategy ETF!

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DEFI TIMES @defitimes

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Teller has transferred nearly 2,200 NFTs to Polygon! Scaling solutions are growing!

Infrastructure Bill

DEFI TIMES @defitimes

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The infrastructure bill caused a lot of confusion this week - Here’s what you need to know!

Hop Protocol MATIC withdrawal

HopProtocol @HopProtocol

BIG NEWS: you can now withdraw $MATIC instantly from @0xPolygon to Ethereum or @xdaichain instead of having to wait 7 days ⚡️ This is a first for $MATIC and a litmus test for Hop to assess demand for fast exits. Try it 👉 hop.exchange medium.com/hop-protocol/h…

medium.comHop supports instant $MATIC withdrawalsWe’re thrilled to announce that Hop now supports instant $MATIC withdrawals from Polygon to Ethereum and other supported scaling solutions. While the native Polygon bridge has seen considerable…

With Hop Protocol’s token bridge, MATIC withdrawals from Polygon to Ethereum take approximately 4-5 minutes.

Bitwise UNI & AAVE

Bitwise @BitwiseInvest

Our launch of the Bitwise Uniswap Fund provides easy, efficient access to #Uniswap, the leading decentralized exchange by volume for trading of #crypto. Learn more here: bitwiseinvestments.com/resources/pres…

Bitwise launched UNI and AAVE funds for institutional investors.

BitDAO launches on Sushi MISO

SushiChef @SushiSwap

We are excited to announce collaboration with @BitDAO_Official a new DAO supported by Peter Thiel Founders Fund @PanteraCapital @dragonfly_cap, @TheSpartanGroup @Bybit_Official BIT will be listed on MISO August 16th via a Dutch Auction with airdrops for early participants.

BitDAO launches on Sushi MISO - it’s a new DAO that was initially backed by Peter Thiel!

Sushi doesn’t launch on Optimism

Joseph Delong 🔱 @josephdelong

Why we Sushi isn’t coming to @optimismPBC. Or at bare minimum is taking a wait and see approach that prefers credibly neutral platforms like @arbitrum. ǟ ȶɦʀɛǟɖ 🌶

Sushi has announced that they won’t launch on Optimism. They prefer Arbitrum, due to conflicts with the Optimism team. I highly recommend reading this thread!

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DISCLAIMER: All information presented above is meant for informational purposes only and should not be treated as financial, legal, or tax advice. This article's content solely reflects the opinion of the writer, who is not a financial advisor.

Do your own research before you purchase cryptocurrencies. Any cryptocurrency can go down in value. Holding cryptocurrencies is risky.