Platypus DeFi Protocol Suffers $2 Million Loss in Series of Flash Loan Attacks

Platypus, a decentralized finance (DeFi) system, was hit hard by a sequence of flash loan attacks, resulting in the loss of over $2 million. In the aftermath of the assault, the protocol swiftly froze all its liquidity pools.

Security experts from CertiK, a blockchain protection firm, revealed that the DeFi system was targeted thrice. The thieves successfully lifted approximately $2.23 million through these breaches. On October 12, the burglars made away with $1.2 million from Platypus in their initial strike. Within hours, they returned, siphoning another $575,000, and only sixty seconds afterward, a subsequent $450,000 was pilfered.

For context, Platypus functions as an automated market maker (AMM) system. This means that it relies on liquidity pools to facilitate the automatic trade of digital assets, contrary to the typical markets where you find direct transactions between buyers and sellers.

Interestingly, in 2021, the platform secured financial backing worth $3.3 million. This fundraising initiative was notably championed by Three Arrows Capital, which has since declared bankruptcy.

To shed light on the term, a flash loan attack involves cybercriminals manipulating system vulnerabilities. This lets them instantly secure cryptocurrency loans without the requisite collateral backing.

2023 hasn't been kind to Platypus. Earlier this year, on February 16, the system suffered a massive blow with $8.5 million vanishing due to a similar breach. The repercussions of this incident were severe; it led to the Platypus USD (USP) stablecoin value plummeting from $1 to a meager $0.47. Fast forward to July, and the protocol was compromised again, albeit on a smaller scale, with losses totaling around $156,999.

As a remedial measure post the devastating February breach, Platypus had set up a portal in March. The purpose of this online space was to assist affected users.

They could log in, ascertain the compensatory amount due to them, and voice any related grievances before receiving any financial reimbursement.

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