Sovryn, a Bitcoin defi protocol, loses 1.1 million dollars, stolen by the exploiter

In a perhaps unsurprising turn of events, Sovryn, a Bitcoin-based defi protocol, lost a lot of money to an exploiter exploiting an older feature. Keep reading to learn more about what happened.

More than $1.1 million stolen from the Sovryn defi protocol

4 October 2022 pic.twitter.com/mphpYzLfiq

— web3 works just fine (@web3isgreat) 6 October 2022

A tweet from the aptly named @web3isgreat reported this news, as well as on their official website. The report is as follows:

Bitcoin-based defi protocol, Sovryn, lost $1 million due to a price manipulation attack. An exploiter was able to use the project’s old borrow and lend functionality to withdraw 44.93 RBTC (~$915,000) and 211,045 USDT.

According to the protocol, their developers were “able to identify and recover funds when the attacker attempted to withdraw funds”. They have also announced that the Exchequer, the project’s finance committee, would “reimburse” the remaining stolen funds.

For those who don’t know, let’s break down their statement bit by bit. Bitcoin is one of the world’s leading cryptocurrencies and is arguably the one that started it all. Decentralized finance, or DeFi for short, refers to any form of finance that is based on the blockchain. These financial systems, as the name suggests, do not depend on central financial intermediaries. Examples of these intermediaries include banks or brokerage houses. The blockchain is basically a decentralized ledger that keeps track of peer-to-peer transactions.

To summarize what the report says, a hacker was able to use an old feature in Sovryn to manipulate prices. When the hacker did that, they withdrew a whole lot of cryptocurrency from the service. The amount withdrawn reached $1.1 million. However, the developers managed to recover the funds and are currently placing them back into the treasury.

While this may look like a done deal, it really isn’t. Decentralized financial networks are all the rage right now on the internet. You’ve probably seen so many Twitter posts talking about how this cryptocurrency or DeFi will be the next big thing. However, it is not worth it. As can be seen here, people can lose a lot of money in seconds. This is not the first time a major hacking has occurred that led to the loss of so much money. Just this year, the Ronin wallet was hit by an exploit, resulting in huge losses. Imagine thousands, if not millions, of people suddenly losing access to their money.

What the hacker did is not the only exploit that exists in this environment. Cryptocurrency, specifically play to earn crypto play, is already under fire for what is basically exploitation. People who know nothing about the system are attracted by the promise of easy money without doing much. More often than not, this results in them losing money without even knowing what went wrong. And now with the existence of Web3, and the people pushing for it, there is a real danger that even more people will fall for the empty promises it makes.

Even though the Bitcoin-based Sovryn defi protocol developers said that everything was taken care of, it doesn’t change the fact that it happened. Even if the lost money is back in the system, the damage is already there. Decentralized financial systems, cryptocurrency and Web3 are not the way forward. The only ones who can profit from this are those who are above all, those who administer these systems themselves. Everyone else is just collateral damage.

Be careful when you get involved in anything related to all of this. Do your research and don’t take their word for it lightly.

If you want to learn more about the details of this event, go here.