Ankr Deploys $15M to Buy Back Bad Debt Following Exploit

Blockchain infrastructure platform Ankr has announced that it would be allocating $15 million to cover the bad debt as a result of its recent exploit. 

Ankr To Buy Back Bad Debt 

Blockchain infrastructure platform Ankr has announced that it is planning on allocating $15 million to buy back the bad debt which resulted from its recent exploit and the subsequent over-circulation of HAY tokens. The HAY stablecoin, a stablecoin pegged to the US Dollar issued by the stablecoin protocol Helio, lost its peg due to the hack. Helio added that it had bought back around $3 million of bad debt in HAY from the open markets. 

The Ankr Exploit 

A series of seemingly unrelated incidents resulted in the bad debt and the subsequent de-pegging of the HAY stablecoin. On the 2nd of December, a hacker could manipulate certain vulnerabilities in the Ankr protocol’s smart code, compromising several private keys after a technical upgrade carried out by the Ankr team. As a result of the exploit, the hacker was able to mint 20 trillion Ankr Reward Bearing Staked BNB (aBNBc), pegged to the BNB token. The hacker then dumped these tokens, leading to aBNBc’s price crumbling from around $300 to less than $2. In an analysis of the exploit, Ankr added,

“Our analysis shows the $aBNBc token contract has an unlimited mint bug. Specifically, while mint() is protected with onlyMinter modifier, there is another function (w/ 0x3b3a5522 func. signature) that completely bypasses the caller verification to have arbitrary mint !!!”

Trader Takes Advantage 

After the exploit, a trader could take advantage of an alleged hard-coding of pegged prices between aBNBc and BNB on the Helio protocol. As a result, the trader was able to purchase 183,885 aBNBc using just 10 BNB. The trader then used the purchased aBNBc tokens as collateral, borrowing 16 million HAY stablecoins and then immediately swapping them for 15.5 million Binance USD (BUSD). This allowed them to earn a staggering 5209x profit on their original capital. 

HAY Stablecoin Loses Peg 

As a result, the HAY stablecoin lost its peg to the dollar, crashing to a low of $0.20. However, the stablecoin recovered most of its losses and is currently trading at $0.95, according to data from CoinMarketCap. After the incident, the Helio team issued a statement that they would be repurchasing the excess HAY tokens in circulation and sending them to a burn address. In a Twitter update, Helio stated, 

“Dear Helio #Guardians, the team understands that the past few days have been extremely difficult. As the situation is changing and dynamic, we would like to provide an update on our plan to recover the peg. Firstly, the team has already started our peg recovery process for $HAY, and this process is expected to be completed by Tuesday, the 6th of December, UTC +4. We expect HAY to be re-pegged, or at the very least, be close to the $1 mark.”

Helio Begins Buyback 

In another update on Twitter issued on the 7th of December, Helio stated that it had already bought back $3 million worth of HAY stablecoins.

“We have already kickstarted our HAY recovery process through our first batch of buybacks. ~3M of HAY has already been bought back so far, and the buyback is still in progress. We will share the relevant addresses once our first batch of buybacks has been completed.”

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.