Poly Network was hit for the second time in two years by a cyber hacker. However, while the attack undermined over $40 billion worth of assets, the attack was less damaging than the $600 million attack in 2021.
Poly Network’s Narrow Escape
Poly Network woke up to an ongoing attack on Sunday morning resulting in a temporary halting of services. The blockchain bridge which facilitates the interoperability and transfer of assets between blockchain platforms is one of the most targeted parts of the crypto ecosystem.
In this attack, the hacker was able to use a flaw in the platforms’ smart contracts to create an infinite number of tokens from the Poly Network pool. In total, they were able to mint a variety of tokens including BNB, SHIB, and COOK worth over $42 billion theoretically.
More precisely, they minted about 100 million BNB and 10 billion BUSD on Metis Blockchain and 999 trillion SHIB on the Heco network. They also minted a large number of additional minor tokens on the Polygon, Avalanche, BNB Chain, and OKX chains, including COW, COOK, OOE, STACK, and GM.
Had this attack been successful as planned, this would have been the largest crypto hack in the entire industry. Instead, the hacker only made away with $5 million out of the billions they stole.
This is due to the lack of liquidity on the networks that the attack had targeted.
Because there wasn’t a pool where the newly created cryptocurrencies could be exchanged, the hacker found themselves in possession of a staggering amount of tokens that were all worthless.
This is thanks to the Poly Network team which acted quickly to notify on-chain analytics companies and significant crypto projects. The projects such as METIS stopped the liquidity taps for the affected assets and networks preventing further losses.
All minted METIS tokens from PolyBridge have been locked on BNBChain by PolyNetwork and have limited liquidity.
— Metis (@MetisDAO) July 2, 2023
Additionally, Poly Network quickly suspended its services and informed users of the attack. The team then took time to examine the scope of the breach and ascertain how it affected the assets of the users.
While the specifics were being looked into, Poly Network comforted its users, advising them to keep calm and stressing its dedication to safeguarding their funds.
We also welcome assistance from cybersecurity professionals to support us in resolving this matter. We genuinely appreciate your understanding and want to assure you that we will keep you promptly updated on the latest developments concerning this incident. 【2/3】
— Poly Network (@PolyNetwork2) July 2, 2023
Out of the 57 assets that were exploited, the hacker only managed to convert about 20 of them.
According to Lookonchain, the attacker was able to exchange 94 billion SHIB tokens for 360 ether (ETH), 495 million COOK for 16 ether, and 15 million RFuel for 27 ether. Notably, the conversion excluded billion-dollar values in BUSD, BNB, and SHIB.
Cross-Chain Bridge Vulnerabilities Exposed
Cross-chain bridges, such as the one offered by Poly Network, are essential for facilitating smooth asset transfers between various blockchain networks. However, this instance brought to light the dangers that come with such interoperable solutions.
Due to their vulnerability in addition to the amount of assets they provide access to, bridges have historically been a target for hackers. Similar attacks have been carried out in the past across several networks by hackers who issued huge amounts of tokens to themselves.
While the liquidity taps still run dry, regulators and on-chain tracking firms are attempting to identify the cybercriminal who made away with $5 million.
According to Coinmarketcap, the heist did not shake investors and the market did not react to the news. BUSD, for instance, retained its peg to the USD for the entire period. SHIB, on the other hand, saw a small fluctuation in prices on Sunday but has risen to $0.0000077 at the time of writing.
BNB also maintained its price above the $244 mark all day and has increased to $248 at the time of writing.
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