Though crypto hacks have been prominent since the blockchain industry emerged, blockchain security firms are working hard to bring security and transparency to the sector. This time, BlockSec, a smart-contract auditing firm dedicated to building a security infrastructure, has prevented a hacker from stealing $5 million in crypto funds on ParaSpace.
ParaSpace is a decentralized lending protocol allowing users to lend or borrow various crypto assets on the Ethereum blockchain. Besides the platform enabling users to lend NFTs or other assets to receive a percentage in the form of interest, ParaSpace lets the users use borrowed funds as collateral.
The vulnerability in the lending protocol of this smart contract enabled the hacker to borrow assets with fewer NFTs than required as collateral, allowing the attacker to drain liquidity protocol. Fortunately, the exploiter failed in its first attempt to execute the transaction due to insufficient gas fees he has. Meanwhile, smart-contract auditing platform BlockSec detected the hack and modified the protocol in time to prevent the hacker from liquidating the crypto asset.
Abeerah Hashim, an Associate Editor at PrivacySavvy, a trusted cyber security website, initiated a warning as a group of crypto publishers reached out.
“While it’s great to see BlockSec successfully prevent this attack, it’s critical to note that vulnerabilities in security systems can still exist. As cyber attackers continue to evolve and develop new methods, it’s crucial for companies to regularly assess and update their security measures to stay ahead of potential threats.”
Ethereum’s price is currently trading at $1,820 in the daily chart. | Source: ETHUSD price chart from TradingView.com
ParaSpace Paused Operations After Hack
To comment on the incident, ParaSpace tweeted;
We alongside @BlockSecTeam have identified the cause of the exploit that occurred earlier on the ParaSpace protocol, and we are relieved to share that all user funds and assets on ParaSpace are safe and secure. No NFTs were compromised and financial losses to the protocol are minimal.
ParaSpace further noted platform had paused all operations until it erased the vulnerabilities identified through the exploit. In other words, any transaction, withdrawal, or deposit cannot proceed as the smart contract’s team is currently “fixing the identified vulnerabilities.”
Lei Wu, co-founder and CTO at the BlockSec, highlighted that the internal security function automatically monitored the transaction linked to the hack. He said that the security function has the ability to prevent a hack in real-time.
The NFT lending protocol explained the exploit had cost the smart contract a loss of 50-150 Ethereum due to the attacker “swapping between tokens during the exploit .”But the ParaSpace will allocate these funds to smart-contract from its pocket to make it nothing has been lost.
Interestingly, the hacker left an on-chain message after he failed to steal the funds, asking BlockSec to return some of the gas fees he spent during the ParaSpace hack. He wrote:
I couldn’t make it work because of a stupid gas estimation error. Since I lost a lot of money trying to make it work, it would be nice to get at least some of that back… good luck,
BlockSec has not rescued the funds from cybercriminals for the first time. The security firm recently saved $2.4 million from the Platypus Finance exploiters in February 2022. In April 2022, it prevented hackers from stealing $3.8 million from Saddle Finance.
Featured image from Pixabay and chart from TradingView.com
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Author: Jammy Hunts