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Ethereum-powered Synthetic Asset Platform Loses More Than 37 million sETH Following an Oracle Attack

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Synthetix suffers oracle attack

Synthetix, an Ethereum-based synthetic issuance platform has suffered an oracle attack. A report on June 24 unveiled this news noting that the platform lost over 37 million synthetic ETH (sETH). While the amount of sETH stolen is 37 million, the value in US Dollars is unknown. This is because the asset is fairly illiquid on secondary markets.

In the report, the CEO of Synthetix, Kain Warwick said,

There has been an incident with the price feed of sKRW, we are currently investigating the root cause, but during the time when the price feed was returning the wrong value we believe an automated arb bot converted into sKRW and then into sETH.

Synthetix Suspends All Transactions

Following the attack, Synthetix has put all transactions on hold until it corrects this problem. Reportedly, the firm has the ability to stop all transactions because it has total control over its smart contracts.

According to Warwick, an arbitrage bot was behind this so-called “attack.” He noted that they aim to contact the bot owner to fix this issue. To help expedite solving this problem, the platform has offered a reward in the form of a bug bounty. Warwick believes that the bounty reward would also help prevent a similar occurrence in the future.

This news comes after Synthetix became the latest synthetic platform to gain traction in the decentralized finance ecosystem. Designed as a multi-tier issuance platform, collateral type, and exchange, the firm lets users mint synthetic assets. The platform allows minting from crypto, fiats, or derivatives.

Prior to this, a publication noted that Synthetix has come a long way to increase its popularity and offer a smooth user experience. However, the report claimed that the platform’s mechanisms of ensuring the value of minted synthetic products are deficient. As a result, the firm exposes its users to risk.

According to the author of the report,

The irony of this situation is that the currently suboptimal design of the Synthetix platform makes it’s actually very difficult to realize gains from this kind of attack,

Also, a previous report unveiled that white hat hackers earned rewards for fixing more than 40 bugs in March. The ethical hackers made a total of $23,675 within 30 days. Per the publication, a third of this amount came from the consensus algorithm and Tendermint, a P2P networking protocol firm.

Do you think Synthetix will be able to recover the lost funds? Let us know in the comments section below.

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