- Fantom-based Polter Finance has been forced to ‘pause’ operations.
- The decision comes after the platform has been wiped out in a recent exploit.
- Several analysts have weighed in on the cause of the exploit.
Many years later, vulnerability to exploits continues to be an obstacle to DeFi adoption, more so as there is often little hope of recourse for victims.
The victims in the latest instance are primarily Fantom-based lending protocol Polter Finance and its users.
Polter Finance Wiped Out
Fantom-based lending protocol Polter Finance has been forced to ‘pause’ operations. The project disclosed the move on Sunday, November 17, noting that it suffered a devastating exploit that saw its TVL tank from about $9.7 million to just about $60,000 at the time of writing.
"The platform was paused soon after the exploit was identified. Bridges were notified. We identified wallets involved and traced it to Binance. We are still investigating the nature of the exploit. We are in the processing of contacting the Authorities," the project asserted in a sparse initial statement.
In the police statement shared hours later, the project’s founder, “whichghost,” reported that over SGD 16 million, worth approximately USD 12 million, was lost in the exploit. They asserted that this total also included personal losses of up to SGD 300,000, or about USD 224,000.
Beyond contacting Binance and the authorities, the team has also involved a couple of crypto security outfits and tried to initiate on-chain negotiations with the attacker. At the time of writing, there has been no response to Polter Finance’s initial outreach.
Polter Finance’s woes appear to have started with an ill-fated listing.
BOO
As detailed by several security firms in the aftermath of the attack, the Polter Finance exploit can be traced to a vulnerability in a smart contract added just the day before to allow the lending of a token called BOO, a fact the project has admitted to in a postmortem released on Discord.
All accounts indicate that the attacker was able to leverage a price vulnerability in the smart contract to briefly inflate the value of BOO to borrow far more tokens than the actual value of their collateral, otherwise known as a flash loan attack.
Polter Finance admitted that it had not conducted a third-party audit of the smart contract used to add support for the BOO lending market, adding that the vulnerability had not come up in internal testing.
The team’s failure to conduct a third-party audit of the smart contract has unsurprisingly drawn significant flak, with some even alleging that it suggested potential insider cooperation in the exploit.
Following news of the exploit, the price of Polter Finance’s native token, POLTER, dropped over 85% from about $0.1257 to $0.0188.
On the Flipside
- The project’s chances of recovery may increase if the attacker is willing to negotiate.
Why This Matters
The recent Polter Finance exploit reminds us why many outside crypto continue to see DeFi as a Wild West.
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