The bZx glitches that resulted in a hacker exploiting the platform up to the tune of $350,000 has generated uproar in the cryptocurrency space, resulting in experts questioning the technology behind DeFi with some revealing its shortcomings.
As discussion on the hack increases, blockchain security firm PeckShield has lent the space its voice on the matter.
Researchers as PeckShield took their time to look into what transpired. The firm claimed the issue that led to the exploit is peculiar to current DeFi projects that share so-called composable liquidity.
The issue, according to the firm is “likely exploitable in a number of similar settings (particularly with margin trades or borrows).”
The firm says the exploit, is technically “original”. The attack, as analyzed by PeckShield is an interesting one that employs a combination of features like flashloan, margin trade, and pump-and-dump, and made possible through the current shared composable liquidity model.
The 5x margin trade gives room for a large volume of tokens with relatively low cost and the shared liquidity. This the analysis avers contributed to the pump-and-dump scheme from one DeFi project to another.
Litecoin’s Charlie Lee Weighs In
Litecoin creator, Charlie Lee, upon hearing about the exploits, said it was one of the reasons he never trust DeFi.
Claiming DeFi is not decentralized, Charlie Lee said most DeFi can be shut down by a centralized party and hacks on cannot be undo or exploited unless more centralization is added.
He said: “This is why I don’t believe in DeFi. It’s the worst of both worlds. Most DeFi can be shut down by a centralized party, so it’s just decentralization theatre. And yet no one can undo a hack or exploit unless we add more centralization. So how is this better than what we have now?”