Cover Protocol has become the latest decentralized finance (DeFi) project to suffer from a hack, which caused the price of its token to plummet in a mater of hours.
The attacker exploited a bug in the Cover staking protocol to print over 40 quintillion COVER tokens, which caused the price of the token to plummet from around $850 to less than $50 in a mater of hours. The attacker had liquidated over 11,700 coins on the 1inch decentralized exchange, draining the project for $5 million.
According to Sorawit Suriyakarn, the CTO of Band Protocol, the hacker used a new exploit not seen in any of the recent DeFi hacks. Using Twitter, Suriyakarn explained the attacker most likely exploited a Solidity bug, which involved the use of memory and story incorrectly in the programming language. He tweeted:
In a surprise twist of events, hours after the hack Grap.Finance — a so-called “white hacker” — claimed responsibility for the incident on his Twitter account, saying that all funds have been returned to the project. The hacker also left a message for the Cover protocol team:
After receiving 4,350 ETH back from the hacker, the DeFi protocol said it was considering launching a new COVER token “through a snapshot before the minting exploit was abused”. The firm further noted that the returned ETH will also be handled through a “snapshot to the LP token holders”.