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Decentralized Finance (DeFi) protocol DEUS has experienced a loss exceeding $6 million due to a security incident involving its stablecoin DEI. The breach was attributed to a vulnerability in the BNB Smart Chain (BSC) on May 5, as reported by blockchain security firm PeckShield.
A bot was responsible for initiating the hack on the BSC, resulting in a loss of over $1.3 million. The attacker also targeted the Arbitrum network, where ARB/ETH deployments suffered losses exceeding $5 million. Users on Twitter suggested that a fundamental implementation error in the token contract was the primary issue.
Hi @DeusDao: it appears to be a public burn vulnerability with loss > $1.3M alone at BSC. The ARB/ETH deployments are also affected.
The BSC hack was successfully frontrun by a bot: https://t.co/hXskQOIfwV
The DEI token @ BSC was upgraded on Apr-10-2023 https://t.co/QJHwnZaXMk pic.twitter.com/C51CnVsg1B— PeckShield Inc. (@peckshield) May 5, 2023
The protocol acknowledged the attack, suspended all contracts, and burned DEI tokens to mitigate further harm. “We are currently in the process of understanding the actual backing of DEI tokens,” stated the DEUS team on Twitter, noting that a “comprehensive recovery and redemption plan” will be developed following a thorough analysis of the balances and snapshots.
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DEI serves as a collateral mechanism for third-party instruments built on the Fantom protocol. Its price has decreased by 30% in the last 24 hours, according to data from CoinMarketCap. The stablecoin is currently trading at $0.20, having lost its $0.30 peg. Last year, the stablecoin also lost its $1 peg following the collapse of Terraform Labs.
This is not the first incident involving a hack of DEUS Finance. The protocol was compromised in March 2022 during a flash-loan attack, leading to losses exceeding $3 million in Dai (DAI) and Ether (ETH). At that time, PeckShield disclosed that the perpetrators laundered the stolen funds using the coin mixer tool Tornado Cash.
DEUS Finance operates as a decentralized marketplace that facilitates the trading of digital assets and non-digital assets, such as commodities, on the Ethereum blockchain.
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