The Latest DeFi Hack of MonoX Finance Has Drained $31 Million.

The Latest DeFi Hack of MonoX Finance Has Drained $31 Million.
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MonoX, a decentralized platform that provides its users with superior DeFi products, has been exploited recently and has lost around $30 million worth of WETH and MATIC.

The exploit was a result of a smart contract bug:

15,523 Polygon and 406 ETH addresses were affected during the hack that drained around $31 million from the pool.

The reason for MonoX’s exploit is said to be a smart contract bug that allowed the bought and sold token to be the same. In other words, during a swap, the smart contract permitted the transaction for the same values of “tokenIn” and “tokenOut" functions. It, then, caused a price appreciation of the MONO token. These highly-priced MONO tokens were then used by the hacker to buy all other assets in the pool.

https://twitter.com/MonoXFinance/status/1465694996762226700

It is being said that the attack was absolutely organized and completed through a script.

MonoX team is looking for a compensation plan in the future:

Soon after the attack, the contract was paused by MonoX, and it will be resumed only after the team comes up with an adequate compensation plan. The team has tried contacting the attacker by submitting a message through the ETH mainnet.

The team seems to be determined to mitigate the future risks of the attack and is collaborating with the security advisors to identify the hacker.

MonoX’s Insurance fund of $1 Million will soon be distributed among the users:

To cover the safety of the protocol, MonoX has already purchased USD 1 million worth of coverage through Tidal Finance

The plan covered the smart contract vulnerabilities of MonoX, which were deployed on Polygon Network, and it also included the single asset liquidity pools feature. The insurance would mean that MonoX can claim the funds in case of any economic exploitation of the platform resulting in the loss of users' funds.

Keeping in mind the $1 million insurance of the MonoX platform, users can soon expect compensation for their lost funds during the hack.

About MonoX platform:

It is a multi-chain decentralized exchange that aims to solve capital inefficiencies using a single token pool model. MonoX creates a virtual pair with vCASH token and hence, facilitates the single-sided liquidity. 

MonoX also offers additional DeFi services, including the lending and derivatives market. The most crucial thing regarding the platform is that projects' tokens can be launched with almost zero capital, and its design results in significantly lower trading fees for its users. 

Closing thoughts

Decentralized Finance has become the centre of the blockchain industry since the start of 2020. DeFi is building new financial systems across the world, and decentralized exchanges are the essential pillars of the DeFi ecosystem. MonoX is one such DEX that focuses on using the funds to build the project instead of providing liquidity. 

Despite the considerable importance of DeFi platforms in the economy, these are pretty vulnerable to hacks cannot be neglected. MOnoX is indeed not the first case DeFI hack. According to the reports, 2021 has witnessed a loss of more than $1.4 billion in cyberattacks in the Decentralized Finance ecosystem.

Most of the hacks are due to the developer incompetence and the coding mistakes made while writing the code. Considering this, it is much needed to secure the Defi platforms.