A DeFi Exploit drains $45M from Pancakebunny overnight and ended up crashing the price of the token as we can see more in our latest cryptocurrency news today.
One of the things that people like about crypto is that it is usually transparent. Ledgers keep a record of the transaction on the blockchain and block explorers like BSCScan and Etherscan will let you pursue the archives with a search function. Criminals often have ways of bypassing the paper trail but when a large amount of money changes hands, people notice. Last night, Pancakebunny, a Defi protocol that operates on Binance Smart chain was exploited out of $45 million and thanks to the distributed ledgers, there’s a record of how it happened.
Team Bunny has outlined detailed post-mortem and plan for compensation process, new Token, new BUNNY emissions and new Bunny Pool in our Medium article. Please find the link below.
Remember, no vaults were compromised. Your funds are safe.//t.co/Q1BIoz63fy
— pancakebunny.finance (@PancakeBunnyFin) May 20, 2021
Trading platforms under the heading of DeFi are non-custodial which means that the smart contracts themselves are moving money around rather than bankers and investment managers. The algorithms decide the allocations and there’s now about $70 billion entrusted in these systems on the Ethereum network alone as per the blockchain data site DeFi Pulse. There’s another $30 billion locked up on the binance Smart Chain according to the BSC metrics side Defistation.
Like most things in crypto, PancakeBunny has a governance token $BUNNY which was trading at $145 a day ago before the DeFi Exploit drains the funds. Since the DeFi protocols like PancakeBunny don’t deal with banks, they incentivize the liquidity with the dedicated LP Tokens and anyone can pour money into the DEfi service and will become a liquidity provider with the more money being put in, the more LP Tokens you will get. These are valuable in and of themselves but they can be used to claim rewards.
The price of the tokens is controlled in part by the algorithm known as the automated market marker and PancakeBunny exploiter was able to manipulate the AMM with flash loans sending the price up artificially. According to the analysis from the blockchain data company PeckShield, the attacker used a function called getReward and claimed the outsize rewards or over $1 billion at prices a day ago. BSCScan shows that after dumping the tokens and paying the flash loans back, the exploiter came away with $45 million.
The attacker then minted new coins but is still negative for the holders of the token. The price crashed to $20 last night. PancakeBunny developers said that they plan to compensate the holders for the difference between the market cap and the price during the exploit by issuing a new token and creating a compensation pool.