DeFi platform bZx to compensate users after successive hacks

DeFi platform bZx to compensate users after successive hacks

Decentralized finance (DeFi) platform bZx has pledged to compensate its users after it suffered two hacks in quick succession three weeks ago. The platform has also pledged to invest more in its security and make significant changes to its development process. And while the hacks brought the security of DeFi platforms into question, bZx has assured users that their funds are now safe.

In mid-February, an anonymous criminal conducted an arbitrage attack against bZx, making away with $350,000 worth of Ether. Unlike other hacks, the criminal in this case did not conduct an intrusion into the platform’s systems. Instead, he managed to exploit a bug in its system, taking advantage of a system that had been put in place to increase security. Just four days later, it suffered another hack, with the hacker this time getting away with $645,000.

The platform has now come out to give details about the attacks and detail how it intends to move forward. The founder, Kyle Kistner has stated that bZx takes full responsibility for the attacks and that the affected users will not bear any losses from the hacks. bZx and the platform’s stakeholders will instead absorb the losses, he revealed.

Kistner also assured the users that despite the attacks, their funds are safe and that bZx will take a number of measures to enhance the security of their funds. They include changing their code development process, he stated, adding, “We will be delegating judgment to an independent panel to remove any conflicts of interest. We will never deploy unaudited code, no matter how minor.”

Other changes will include increasing the bug bounty reward, increasing the bug bounty program’s visibility, removing any barriers to reporting bugs and creating a public record of all the bug bounties it pays.

Kistner further revealed that the attacks had had a surprising positive effect. He stated:

“It is surprising and counterintuitive to note that this second attack actually increased our ability to service our debts. Before the second attack we were only able to service the debt for 202 years, but that figure has climbed to 265.14 years. This is because the second attack left proportionately more collateral in the protocol than the first.”

bZx has also integrated Chainlink, a decentralized oracle network, with Kistner explaining, “In Phase 0 we will use Chainlink to provide reference prices. If there is an excessive deviation between the price quoted for a DEX trade and the Chainlink reference price, the transaction reverts. We believe that Chainlink represents one of the best decentralized oracle solutions on the market.”

New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.

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