On October 8, 2021, the Mirror Protocol got hacked for 90 million dollars (around 71 million pounds), and more than seven months later.

It was only disclosed that a multimillion-dollar heist had taken place. According to Twitter user FatManTerra, he found the breach by accident.

The hack takes place on the DeFi platform dForce, which offers decentralized lending and borrowing services. The funds were taken from the Mirror Protocol, a DeFi protocol. That allows users to trade synthetic assets that track real-world assets.

The attack was carried out by exploiting a flaw in the price oracle system. By creating a malicious price oracle. The attacker was able to inflate the value of the USDC stablecoin, which is pegged to the US dollar.

As permeable as a filter

Because of a flaw in the smart contract, the hackers were able to extract millions from the Mirror Protocol. The fact that it’s possible to “lift money out of the contract repeatedly, risk-free’ due to this blunder;” makes it possible for them to steal money.

In the Mirror Protocol, the contract served as a deposit for digital assets. For months, it is apparent that this digital safe is as leaky as a basket, with all of its drawbacks.

The DeFi space is still in its infancy, and as such, is rife with exploits and vulnerabilities. This hack is a stark reminder that we must be vigilant in auditing smart contracts and protocols. Before entrusting them with our digital assets.

Contracts on Terra protocol

The Terra blockchain was used to implement the Mirror Protocol. You’ve undoubtedly heard about it in recent weeks, owing to the enormous drama that occurred there.

Following the UST stablecoin’s peg to the US dollar being lost, the LUNA token went down as well. With billions of dollars worth of assets vaporizing into digital smoke.

The assets of the Mirror Protocol may also be purchased through the Terra blockchain, which is a cryptocurrency. You can also exchange these on Ethereum and the Binance Smart Chain, as well as other blockchains.

The attack was successful in removing all funds from the vaults. Since he or she sent $17.54 (16.66 euros) to pull out all the money from the safe.

What is the Mirror Protocol?

Aside from the fact that the Mirror Protocol’s smart contracts were not entirely correct. It is possible to achieve a lot on the platform. The Mirror Protocol is a decentralized application that enables users to create digital synthetic assets.

A synthetic asset is nothing more than a token that represents the price of a real-world economic commodity. It’s possible to create stocks of Tesla and Google using only cryptocurrencies as underlying assets, for example.

The Mirror community discovered several bugs, which have since their discovery been corrected quietly by the protocol developers.

The team is yet to comment on the situation and has predictably come under strong criticism from the community. FatManTerra believes there was no reason to suspect that the hacker was someone from the organization itself.

It isn’t the only one!

The Mirror Protocol isn’t the first business to learn that money has vanished after a cyberattack. Ronin’s team took six days to realize they had gone on board for $600 million, which is not an uncommon occurrence.

Although there is no denying that 6 days versus 7 months is a significant difference. It does not negate the fact that it exists. The DeFi environment, in particular, still has work to do in this area.

After all, such stupidity should not exist in a mature sector. Certainly not if we want everyone across the world to adopt these kinds of protocols.

James Atkins

I have been writing copy for blockchain-related projects since 2017. I understand the importance of being able to communicate clearly and effectively with both technical and non-technical audiences. By leveraging my understanding of the crypto industry trends, I can help increase adoption in this rapidly evolving landscape.