Avalanche’s DEX loses $12 million in hack; are AVAX holders next to be snowbound

Defrost Finance gets hacked and funds worth $12 million get stolen Avalanche’s TVL and revenue generated declines

A DEX on the Avalanche network, known as Defrost Finance, was compromised by an attack from a hacker. According to data provided by PeckShield Inc, a crypto security analytics firm, the attacker was able to get away with $12 million.

The unfolding of it all…

The attacker managed to add a fake token as collateral, then proceeded to use a fake price oracle. A price oracle is a source of price data streamed onto a blockchain. Using these tools, the attacker managed to liquidate $12 million worth of user funds.

This was not the first attack that had occurred on Defrost Finance. On 23 December, Defrost Finance was hacked and the hacker was able to use flash loans (which is an uncollateralized loans) to steal funds worth $173,000. It is uncertain whether these attacks were carried out by the same or different hackers.

The Defrost Finance team was willing to negotiate with the hacker. In a recent tweet, the team at Defrost Finance announced that they will be willing to pay up to 20% of the funds to the hacker. This was if the hacker manages to give back the remaining funds to Defrost Finance.

The Defrost team is willing to negotiate with the hacker(s).

We are willing to discuss sharing 20% (negotiable) of the funds in exchange for the bulk of assets and are calling on the hackers to contact us asap.

— Defrost Finance ???? (@Defrost_Finance) December 25, 2022

The current state of Avalanche

These concurrent attacks happening in Avalanche’s DeFi ecosystem could affect the overall TVL collected by Avalanche. According to DefiLlama, Avalanche’s TVL reduced from $903 million to $787.03 million over the last month.

Source: Defi Llama

Furthermore, the revenue generated by Avalanche declined as well. Avalanche’s revenue fell by 41.3% in the last 30 days, based on token terminal’s data. At the time of writing, the cumulative revenue generated by Avalanche stood at $3.8 million.

Avalanche wasn’t able to fare well in terms of the NFT sector as well.

According to data provided by AVAXNFTSTATS, it was observed that the top 5 NFT collections on the NFT network witnessed a massive decline in terms of volume. Furthermore, popular AVAX NFT collections such as chikn and FarmLand started to lose interest from NFT investors.

Source: AVAXNFTSTATS

The attacks on protocols in Avalanche’s ecosystem coupled with the declining interest in its NFTs could impact Avalanche’s growth negatively in the near future.

At the time of writing, $AVAX was trading at $11.69 and its price had increased by 0.45% in the last 24 hours.

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