{"id":246438,"date":"2021-05-10T18:54:00","date_gmt":"2021-05-10T15:54:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/defi-hacks-on-binance-smart-chain-rise-as-tvl-and-volumes-increase\/"},"modified":"2021-05-10T18:54:00","modified_gmt":"2021-05-10T15:54:00","slug":"defi-hacks-on-binance-smart-chain-rise-as-tvl-and-volumes-increase","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/defi-hacks-on-binance-smart-chain-rise-as-tvl-and-volumes-increase\/","title":{"rendered":"# DeFi hacks on Binance Smart Chain rise as TVL and volumes increase"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a4e08f3f2e8c\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a4e08f3f2e8c\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/defi-hacks-on-binance-smart-chain-rise-as-tvl-and-volumes-increase\/#Lack_of_due_diligence_and_decentralization\" >Lack of due diligence and decentralization<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/defi-hacks-on-binance-smart-chain-rise-as-tvl-and-volumes-increase\/#Growth_of_BSC_owed_to_gas_fees_on_Ethereum\" >Growth of BSC owed to gas fees on Ethereum<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># DeFi hacks on Binance Smart Chain rise as TVL and volumes increase <\/strong>&#8221;<br \/>\n<img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDUvNmJjNmIyNjctMGM3MC00ZTZkLTlkNGEtZDYxZjMyYzQ3NGE0LmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-5a136f3a>Binance Smart Chain, or BSC, was launched in September 2020 as a parallel blockchain to Binance Chain. It enabled the creation of smart contracts and a staking mechanism for the native token of both blockchains, Binance Coin (BNB).\u00a0<\/p>\n<p>In its brief nine-month existence, there have been a lot of decentralized finance, or DeFi, projects built on it, but there have been numerous instances of hacks on the blockchain\u2019s protocols as well.<\/p>\n<p>The latest victim in the <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/watch-movies-tv-seriess\/\" data-internallinksmanager029f6b8e52c=\"8\" title=\"Watch Movies &amp; TV Series\" target=\"_blank\" rel=\"noopener\">series<\/a> of exploits is Spartan Protocol. The liquidity platform for synthetic assets was the subject of an attack that led to a loss of $30 million for the protocol on May 2. According to blockchain security firm PeckShield, the hack <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/peckshield.medium.com\/the-spartan-incident-root-cause-analysis-a0324cb4b42a\">allowed<\/a> the malicious actor(s) to inflate the balance of a particular liquidity pool and burn liquidity provider tokens for a significant amount of crypto in the pool. This is also referred to as a flash loan attack.<\/p>\n<p>Cointelegraph discussed the root cause of this hack with Michael Perklin, chief information security officer of crypto trading platform ShapeShift, who said, \u201cThe root cause for the Spartan hack <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ears to have been a bug in the ordering of operations in the smart contract,\u201d adding:<\/p>\n<blockquote><p>\u201cThe way Spartan\u2019s contracts were programmed, some operations were performed after updating the pool\u2019s liquidity instead of before, which allowed attackers to control the price of tokens in the pool based on their deposits.\u201d<\/p><\/blockquote>\n<p>According to Rekt, the Spartan Protocol hack is the sixth-largest DeFi <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/rekt.news\/leaderboard\/\">hack<\/a> in the history of the domain. Three of the top six hacks by value exploited have taken place on protocols on BSC, the other two being the hacks on Uranium Finance and Meerkat Finance. In addition to these hacks, even the top DeFi protocol on BSC, PancakeSwap and Cream Finance, were used for phishing attacks to steal money.<\/p>\n<p>In the hack on Uranium Finance, $50 million was stolen off the automated market maker platform on April 28. The hacker exploited bugs in Uranium\u2019s balance modifier logic to inflate the balance of the project by a factor of 100. This was the second hack on the platform in quick succession. The first one was on April 10, where the hacker <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/uraniumfinance.medium.com\/uranium-post-mortem-v2-compensations-aac4b0706d7d\">stole $1.3 million<\/a> from the protocol. Due to this hack, the protocol migrated to the v2 iteration of its code.<\/p>\n<p>In the Meerkat Finance exploit, users lost $31 million on the platform due to an alleged rug pull by the developers. A rug pull is a type of exit scam where in the decentralized market, the support from the liquidity pools is taken away from the market.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Lack_of_due_diligence_and_decentralization\"><\/span>Lack of due diligence and decentralization<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>BSC is an Ethereum Virtual Machine-compatible chain, which means that the network essentially uses similar logic to the Ethereum blockchain. However, the main difference is decentralization. BSC is quite centralized and employs a proof-of-stake authority consensus algorithm.<\/p>\n<p>Instead of having validators across the network \u2014 as is the case with Ethereum \u2014 BSC has 21 validators that are chosen from the network and are responsible for the health of the network and the validation responsibilities. Having only 21 validators on the network makes it highly centralized in comparison to other blockchains.<\/p>\n<p>The blockchain trilemma, a term coined by Ethereum co-founder Vitalik Buterin, describes the improbability of a blockchain getting all three of the following properties: decentralization, security and scalability. This essentially means that improving one of these three aspects would mean that the other two are compromised to some degree.<\/p>\n<p>Therefore, since BSC seems to be compromising on the decentralization aspect, this also potentially means that there should be several points of failure that hackers look to exploit. Marie Tatibouet, chief marketing officer of Gate.io \u2014 a cryptocurrency trading exchange \u2014 told Cointelegraph, \u201cCentralized exchanges and avenues are a lot riskier than their decentralized counterparts, due to their inherent structure. A decentralized system spreads out its risks among its entire network and decreases structural weaknesses.\u201d<\/p>\n<p>Since BSC is a public, permissionless infrastructure, it allows developers to build and deploy DeFi protocols with zero censorship. Thus, the onus of understanding the risks involved with DeFi protocols on the network lies even more on the users. Martin Gasper, a research analyst at CrossTower \u2014 a digital assets exchange \u2014 told Cointelegraph:<\/p>\n<blockquote><p>\u201cA key consideration for BSC protocols is that they are relatively new compared to many of the well-known Ethereum DeFi protocols, which have withstood the test of time and many audits of their code. Newer projects on BSC may also have their code written by less experienced developers, creating additional risks for users depositing crypto into them.\u201d<\/p><\/blockquote>\n<p>Even though in the aforementioned hacks the smart contracts of the DeFi protocols were tampered with and exploited, it doesn\u2019t really reflect on the inherent security vulnerabilities of the BSC network. Cointelegraph reached out to Binance to understand its take on these hacks. While refusing to comment on specific hacks, the exchange representative did compare it to Ethereum in DeFi\u2019s early stages, which placed the responsibility on the users. The Binance spokesperson said: <\/p>\n<blockquote><p>\u201cIn the 2017 ICO boom, multiple ICOs and projects building on top Ethereum were scams and many\u00a0were vulnerable to attacks; that doesn\u2019t mean that the Ethereum blockchain had security\u00a0vulnerabilities, it simply indicated the lack of awareness amongst investors who fell prey to projects\u2019 security breaches. New retail users did not evaluate their risks properly.\u201d<\/p><\/blockquote>\n<p>That being said, ConsenSys Labs, a blockchain <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">technology<\/a> company that backs Ethereum\u2019s infrastructure, does maintain an \u201cEthereum Smart Contract Best Practices\u201d page that lists various known attacks and other important aspects of smart contracts deployed on the network. However, there is no such page maintained for BSC.<\/p>\n<p>Tatibouet further opined that \u201cthe lack of due diligence\u201d caused these hacks in relation to BSC\u2019s centralized nature. \u201cThey are greenlighting hundreds of projects every single week. Due to their centralized approach, they simply don\u2019t have the manpower required to do the necessary check.\u201d She also pointed out that Uranium Finance did not even reveal which firm audited its code, which should have been a major red flag by itself.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Growth_of_BSC_owed_to_gas_fees_on_Ethereum\"><\/span>Growth of BSC owed to gas fees on Ethereum<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Ethereum has been <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/bscscan.com\/chart\/gasprice\">facing<\/a> the issue of high gas fees in recent months. Because of this, several users have been priced out of using DeFi applications on the network. In comparison, BSC, due to its centralized nature, has significantly lower gas fees and faster block times than Ethereum. Ethereum\u2019s gas fees have <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/livdir.com\/ethgaspricechart\/?target=7d\">surpassed<\/a> 300 Gwei so far in May after the Berlin hard fork, which supposedly reduced the gas prices. In comparison, BSC\u2019s gas fees are extremely small, with the average gas price currently standing at 6.6 Gwei.<\/p>\n<p>It\u2019s this difference in gas prices that led multiple DeFi protocols and retail investors to this network. The Binance spokesperson further commented on this: \u201cDevelopers can worry less about costs and focus more on innovating. The faster transaction speed and low transaction costs have accelerated its utility since its launch last year.\u201d<\/p>\n<p>On May 9, BSC\u2019s daily transactions hit their all-time high of <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/bscscan.com\/chart\/tx\">9.7 million<\/a>\u00a0as Ethereum\u2019s daily transactions also hit their all-time high of <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/etherscan.io\/chart\/tx\">1.7 million<\/a> on the same day. That\u2019s nearly six times the transactions on Ethereum. It\u2019s a sign of the rising adoption of the BSC network as more DeFi protocols continue to utilize it. However, on the comparison between the two networks, Gasper opined:<\/p>\n<blockquote><p>\u201cThere seems to be relatively little innovation on BSC, as many of the projects on the network are modeled after the top DeFi protocols on Ethereum. Moreover, Ethereum has a broader product suite and more developers working on it and products for it, relative to BSC.\u201d<\/p><\/blockquote>\n<p>The total value locked, or TVL, in the BSC network is <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/bscproject.org\/#\/\">currently<\/a> nearly at $46 billion, which is a 60% rise over the TVL of $28.6 billion just a month ago. As the adoption of BSC increases, it\u2019s highly critical that users are cautious and do thorough research before investing in protocols housed on the network, due to its centralized approach and the lack of proper due diligence.<\/p>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/defi-hacks-on-binance-smart-chain-rise-as-tvl-and-volumes-increase\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# DeFi hacks on Binance Smart Chain rise as TVL and volumes increase &#8221; Binance Smart Chain, or BSC, was launched in September 2020 as a parallel blockchain to Binance Chain. It enabled the creation of smart contracts and a staking mechanism for the native token of both blockchains, Binance Coin (BNB).\u00a0 In its brief&#8230;<\/p>\n","protected":false},"author":1,"featured_media":246439,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDUvNmJjNmIyNjctMGM3MC00ZTZkLTlkNGEtZDYxZjMyYzQ3NGE0LmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74867,75014,74868,74882,4965],"class_list":["post-246438","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-altcoin","tag-binance","tag-defi","tag-hacks","tag-technology"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/246438","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=246438"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/246438\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/246439"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=246438"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=246438"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=246438"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}