bZx to Compensate Victims Following $1M Loss in Multiple Hacks

The hack on the DeFi platform raised serious questions on the security of such platforms.

bZx, the seventh-largest decentralized finance (DeFi) platform, is planning for a fresh start after enduring massive hacks last month.

The official report authored by Kyle Kistner, co-founder of the project, detailed the major vulnerabilities on the protocol leading to the attack and how the team is now mitigating the risks to move forward.

A high-profile hack

The DeFi platform was attacked twice last month, resulting in the theft of $1 million in Ether. The vulnerability also raised serious questions on the security of DeFi platforms, which were once seen as a major disruption to the traditional financial services.

The exploitation of “flash lending” was done on its Fulcrum platform and also involving Compound, another popular DeFi platform.

Kistner took full responsibility for the attack and assured that the protocol users would not bear any losses. Instead, “the company and the protocol stakeholders are absorbing the losses.”

“Funds have been lost, and yet we claim that user funds are safe,” Kistner wrote.

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He also revealed that the collateral left by the attacker was liquidated into 4099.31 Ether, which is now streaming into the iETH pool as interest.

“Given the current value of the insurance fund and its annualized rate of growth, it should be more than able to cover the loss at the time it needs to be realized in the year 2285 AD,” Kistner noted.

He also mentioned that the company would make significant changes to its development process to prevent any such attacks in the future.

“We will be delegating judgment to an independent panel to remove any conflicts of interest,” he wrote, adding, “we will never deploy unaudited code, no matter how minor.”

The platform will also increase its bug-bounty rewards, increasing the visibility of its bug bounty program.

Meanwhile, the project integrated Chainlink’s solution to ensure better security on its platform.

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