Balancer Faces Critical Vulnerability, Advises Users to Withdraw Liquidity

A critical vulnerability has been discovered in several pools on Balancer, prompting the project to advise users to withdraw their funds immediately.

Incident Update:

• Current Impact: As of 11:00 AM on 23/08, the incident is estimated to potentially cause $27 million in losses. Users are rapidly withdrawing their funds.
• Withdrawals: Data from DefiLlama indicates that around $150 million has been withdrawn from Balancer's Total Value Locked (TVL) within a few hours. Balancer has yet to release detailed information about the vulnerability but has confirmed that no funds have been stolen so far.

Initial Discovery:

• Date of Discovery: Late on 22/08, a severe vulnerability was found in some V2 pools on Balancer. Approximately 4% of TVL, equating to $30 million, is at risk.
• Immediate Action: Balancer has urged users to withdraw liquidity from the affected pools immediately. The project will soon provide further updates and withdrawal instructions for affected users.

Market Reaction:

• BAL Token Price: The price of BAL has seen significant volatility following the security breach, dropping by around 4% in a day. At the time of writing, BAL is trading at approximately $3.44.

Platform Overview:

• Balancer Protocol: Launched in March 2020 on Ethereum, Balancer is an automated market maker (AMM) similar to Uniswap, enabling the swapping/trading of various tokens without the need for an order book. Balancer currently ranks 15th among DeFi protocols, with $836.5 million in assets locked (TVL).

Historical Context:

• Previous Incidents: A year ago, Balancer faced a phishing attack, which was not just a simple domain hijack or interface spoofing.

• Recent DeFi Vulnerabilities: Last month, Curve experienced similar turmoil due to a Vyper vulnerability, impacting several pools and resulting in $52 million in losses. As of 12/08, Curve had recovered 70% of the stolen funds.

Summary:

Balancer is taking swift action to address the discovered vulnerability and ensure the safety of user funds. Users are advised to stay updated with Balancer’s announcements for further instructions.

This incident underscores the importance of rigorous security measures and prompt user notifications in the DeFi space to mitigate potential risks and protect assets.