The smart network of Binance was subjected to a series of attacks on flash credit platforms this month, which caused multimillion-dollar damage, and brought a lot of trouble to the crypto industry.
Flash loans at risk
On May 20, Pancake bunny finance tweeted information about the attack on instant credit, as well as details of the damage caused. Now Burgerswap has experienced the same thing and tweeted about it. Attacks on instant loans are not technical hacking, they involve people who abuse them, and they do cause serious damage to people.
As the name suggests, loans are issued in the blink of an eye. Here on the DeFi platform, these flash loans are borrowed and paid in a single transaction to avoid the scenario of a borrower fleeing with money in the digital world. Well, if bought and repaid in an instant, so the borrower and the lender will benefit. Arbitrage, after all, involves buying a coin at a low price on one exchange, and selling it on another exchange, at a higher price, taking advantage of market volatility on two exchanges in the market. And the arbitrage opportunities are not simplified, so you need a perfect scenario, otherwise you will not have a big profit.
One-time term loan transaction
Since the transaction looks complicated, you need to write code or use third-party API tools. The increase in profit from flash loans based on arbitrage depends on the market volatility of the cryptocurrency that you are going to use for flash loans. Since there is no limit on the number of credits that can be purchased through flash loans, it is possible to make a huge profit by borrowing a huge amount of money that the DeFi platform could handle. Depending on how you make the transactions, there will be a gas charge for the transactions.
What is an Instant Credit attack?
Well, you can see how you can earn money without investing it in any transaction. Imagine that a person buys a huge amount of cryptocurrency and makes a huge profit using the current market volatility. And an attack means repeating the same process over and over again until the market volatility changes. But usually DeFi protocols are protected in such a way as to prevent similar attacks when it happened for the first time, but as you can see, not everything was taken into account, since the registered attacks occur on platforms that have only recently entered the market.
- Pancake Bunny Attack:
On May 20, Pancake Finance, the DeFi platform on the Binance smart network, warned users on Twitter about the instant credit attack, publishing full details of the attack and assuring people who invested in it that the losses would be fully compensated. And the damage amounted to more than $ 200 million.
- Burgerswap Attack:
A similar attack occurred on Burgerswap, which is also a DeFi platform based on the Binance intelligent network. The tweet says that $7.2 million worth of tokens were stolen from their exchange. And it’s really sad to see a similar attack repeated in the same chain for a month.
However, this is not the first time we have seen these attacks. Previously, this happened on the Ethereum network. Since then, several exchanges have taken steps to stop such attacks. However, some smart guys find a way around this as well. People are really working hard to use DeFi platforms as part of several innovative projects, but there are scammers who are always waiting for the exploit to be noticed and taken advantage of. This is very sad for the crypto community.