EarnHub has created a new token to recover lost funds after a user managed to drain almost all funds out of the liquidity pools.
EarnHub’s venture capitalists have stepped in to help the loss due to the exploit. Luckily the project was relatively small, so the amount of funds lost was minimal, but the exploit used was a new one.
Decentralized finance has only just begun and the new features and functions seen in the market appear every day.
Brilliant minds around the world continue to push for a financial product revolution with new ways to improve and expand smart contract capabilities. Unfortunately, new technology has an increased risk of exploits due to a lack of testing.
EarnHub found this out the hard way as one of its new features caused the exploit leading to the hack.
EarnHub is a decentralized finance platform that creates staking pools where users can earn a return on their staked tokens. There are many different pools on the platform and the EarnHub team was set to release a new feature that would enable users to switch between pools without the expensive gas fees.
The new feature had not been launched but the smart contract already contained the functions to make this possible.
A user quickly realized that a fake pool could be created and used to give infinite leverage and allow massive withdrawals from the staking pools.
The EarnHub team was quick to announce the exploit and told users to remove any funds they had in its staking pools.
New features like this are desperately needed in decentralized finance. The cost to add and remove liquidity from staking pools is very high on the Ethereum network. Creating a way to jump between pools with no gas fee is a great benefit to users who want to stay active on the highest yielding liquidity pools.
The EarnHub team will continue to press forward with its product and hope to find a way to implement this new feature without the risk of further exploitation.
Due to the large amounts of funds in DeFi contracts, the likelihood of someone finding an exploit is very high.
New decentralized finance products should be used in a limited way due to their increased risk of exploits. Insurance backed DeFi protocols and projects with long track records continue to be safer bets than newer and more lucrative products.
Looking for your next crypto casino? Check out: Bitcasino, Gamb.co or FortuneJack.