An insignificant DAO project named New Free DAO is reported witnessing an exploitation recently. Prominent blockchain security company, PeckShield, informed about the attack.
On September 8th, 2022, PeckShield informed on Twitter that it had found NFD tokens facing a massive drop of 99% in its value. The drop came in the wake of a flash loan attack on the DAO project.
According to the details PeckShield provided further, the New Free DAO experienced a loss of BNB tokens worth 1.25 million USD. The attacker allegedly executed the theft of BNB and swapped the tokens for BSC-USD.
Binance Smart Chain (BSC) based defi token, NFD was created to offer a variety of features and specifically designed for NFT purposes. Most intriguing part remains that the project is not a significant one, yet it had a volume of over 1 million USD, apparently now lost.
Ease of Initiating Flash Loan Attacks
Flash loan attacks have emerged as one of the popular methods of stealing, especially from crypto centric projects. Mostly the decentralized finance protocols and similar entities are vulnerable to such attacks.
Ease of executing flash loan attacks make it a popular technique among bad actors. The pattern is simple where some fraudster initiates a loan, apparently uncollateralized, and it further manipulates the price. New players within the market act as easy targets for attackers.
Significantly Long History of Such Events
Several reports published in the past proved the fatality of this form of digital attack. Popular blockchain cybersecurity company, Certik shed light on the instance of Avalanche. The blockchain experienced a loss of 370K USD in a theft following an attack on its smart contract and liquidity providers.
Another such instance happened with Cream Finance last year. The lending protocol had faced three consecutive flash loan attacks. Out of which, it saw a theft of 130 million USD in the third attempt. However, the attack on PancakeBunny is apparently among the biggest flash loan exploits where it ended up losing approx 200 million USD.
Source: https://www.thecoinrepublic.com/2022/09/08/1-25mn-usd-flash-loan-attack-on-new-free-dao-nfd-loses-99-of-value/