Critical Vulnerability Hits DeFi Protocol Balancer, TVL Tanks 28%

• Balancer Labs discovered a critical vulnerability affecting its V2 pools.
• The firm has taken action but some funds remain at risk, and users are advised to withdraw from affected liquidity pools immediately.
• Only 1.4% of the total value locked is at risk, with several pools paused to mitigate risks.

Critical Vulnerability Discovered in DeFi Protocol Balancer

Decentralized finance liquidity and yield protocol Balancer has alerted its users about a critical vulnerability affecting its V2 pools. On Aug. 22, Balancer Labs stated that it had received a “critical vulnerability report affecting a number of V2 Pools” and that emergency mitigation procedures have been executed to secure a majority of TVL but some funds remain at risk. Users are advised to withdraw from affected liquidity pools immediately.

Amount of Funds at Risk

In a follow-up note, the project reassured users that “the majority of funds on Balancer are safe” and only 1.4% of the total value locked is at risk, with several pools paused to mitigate risks and will remain so, with users advised to withdraw liquidity as soon as possible. According to DeFiLlama , Balance V2 TVL was around $750 million before the vulnerability was discovered. In the hours since the announcement, Balance V2 TVL has tanked around 28% to $538 million as per DeFi Pulse .

Balancer Address Security Breaches

In response to this security breach, Balancer is currently undergoing an audit by CertiK , a blockchain security firm backed by Binance . Additionally, Balancer announced it would be introducing new features such as an additional layer 2 for transaction signing as well as tighter integration between core components like its smart contract library and wallet module in order prevent similar exploits in the future.

Vulnerability Exploit Hits Defi Projects

The news comes after two other major decentralized finance projects suffered similar attacks over recent weeks: Pickle Finance and Akropolis . Last week hackers exploited a flaw in Pickle Finance’s jar contracts resulting in losses of over $20 million while Akropolis also experienced theft resulting from an exploit on its platform earlier this month totalling around $1 million worth of tokens stolen.

Conclusion

Despite these recent high profile vulnerabilities on various DeFi platforms, analysts believe that they represent growing pains for this nascent industry which will ultimately emerge stronger than ever before due to increased scrutiny and tighter security measures put into place by developers looking to protect user assets better moving forward