Solana TVL dropped 23% after $100M Mango Market hack

The $100 million hack of Mango Markets, a DeFi trading platform on the Solana blockchain, has given the worth of its native token MNGO and that of SOL winding down in one day.

The data from CryptoSlate reveals that the MNGO token slipped over 40% in the past one day to $0.02396. In this time, SOL also dropped almost 1% of its value to trade at $31.

At the same time, the total value of assets closed in Solana slipped 23% to $997 million from $1.32 billion, in line with DeFillama data. This is the first time when Solana’s TVL went down over $1 billion since July 2021.

Mango Market revealed that the attacker influenced MNGO’s worth by taking an oversized place in MNGO-PERP and counter-traded themselves with one more account. This resulted in the USD value of MNGO increasing on different exchanges.

Around 22:00 UTC October 11th the 🥭 protocol had an incident involving the following:
-2 accounts funded with USDC took an outsized position in MNGO-PERP
-Underlying MNGO/USD prices on various exchanges (FTX, Ascendex) experienced a 5-10x price increase in a matter of minutes
— Mango (@mangomarkets) October 12, 2022

The price oracles Switchboard and Pyth surpassed the bar MNGO price based on this, resulting in a “mark-to-market growth in the value of the account that was extended MNGO-PERP from the imperceptible profit.”

This permitted the attacker to swipe up $100 million worth of assets which was all the assets on the platform.

Blockchain security company OtterSec wrote that the hacker influenced Mango’s guarantee, which permitted him to withdraw huge loans from the treasury.

The attacker has issued his terms for giving the funds back by an offer submitted to the DAO.

In line with the attacker, Mango should refund bad debts utilizing its treasury’s $70M USDC. The bad debt in the offer comes from a bailout through Mango Markets and Solend for a Solana whale with almost $207 million in debt on various lending platforms on Solana.

The lending protocol has combined a bailout to protect the market from the risk of pollution if the whale places were to be liquidated.

What does the offer state?

The offer states, “any bad debt will be seen as an error bounty/insurance, paid out of the mango insurance fund.” the attacker also questions whether Mango token holders surrender their right to have any potential claims against accounts having bad debts.

He also needs a guarantee that no criminal action or suspension of funds will happen. At the time of writing, 33 million votes, almost 99%, back the offer.

At the same time, a Twitter user, foobar, highlighted that “yes” votes were coming from the hacker. The attacker will need a minimum of 67 million more votes to attain a majority.