THORChain Taps Its Treasury To Repay $5M In Latest DeFi Attack

THORChain taps its treasury to repay $5 million due to the latest DeFi attack which hit the Ethereum liquidity providers as well. The ThorChain team said the protocol’s treasury will cover all affected users as we can see more in our latest altcoin news today.

THORChain is a protocol for cross-blockchain swaps and a few days ago, its bridge to Ethereum took a hit. The decentralized liquidity protocol for trading crypto across blockchains promised via Twitter that the users affected by the $5 million hacks will be fully compensated:

“The only entity that will wear [sic] the burden will be the THORChain treasury, approx $5m will be used to donate to ETH LPs.”

The attacker paid huge slip fees, approx $1.4m was captured by nodes, with further $1.4m by ERC20 LPs.

Only users affected are ETH LPs, and they will be made whole.

So despite the exploit, Nodes, LPs and Arbers will stand to profit considerably.

— THORChain (@THORChain) July 16, 2021

The network was paused by nodes on Thursday after an attack that ended up in 13,000 ETH being taken. THORChain later took to Twitter to downgrade the figure to $7.6 million worth of ERC20 tokens which are tokens on the ethereum blockchain but then they revised the total to $4.9 million. According to a post on ThorChain’s Telegram channel, the full report after the exploit is coming soon. In the meantime, the platform said that the attacker was able to trick the protocol’s bridge to the Ethereum blockchain- ETH Bifrost.

ThorChain falls under the broad umbrella of Defi which is the term for blockchain-based software that removes intermediaries from financial activities like earning interest, lending, and trading assets and it is built on top of the cosmos network which enables disparate blockchains to share data. According to the platform, liquidity providers or LPs were the only users affected. LPs are users that take the crypto they hold and deposit it with the network so the network can then use the funds to facilitate trades while LPs get a cut. However, this is not the first time ThorChain has been attacked as in late June one attacker made off with $140,000 in ETH and ERC20 tokens after an error in the ETH Bifrost.

ThorChain developers seemed unfazed and said this is why it has a treasury in place. It is all just a part of its Chaosnet which went live back in April. The multi-chain Chaosnet allows people to swap assets on five different blockchains like Bitcoin, Binance Chain, Bitcoin Cash, Litecoin, and Ethereum. Chaosnet is not a mainnet but more like a sandbox as Thorchain works to enhance the protocol. ThorChain taps its treasury to repay the users and said they are patching and restarting the network with the funds going back into the ETH Liquidity pool:

“This is a disappointing moment for all, but LPs and Nodes should be unaffected after all is recovered (the funds will be restored). The network will be stronger and more resilient.”