dForce, a Chinese decentralized finance (DeFi) protocol that is backed by Multicoin Capital, has reportedly been exploited. According to a popular DeFi monitoring resource, the total value locked (in USD) in dForce, was reduced from around $25 million to almost nothing in a matter of hours.
DeFi Lending Protocol Exploited
A well-known DeFi protocol, dForce Network, was reportedly exploited recently. Its lending solution, Lendf.Me, representing an open-source money market protocol, was attacked. According to a local Chinese outlet, the team has already “located the problem and advised all users to stop depositing assets in the loan agreement on the web page.”
On-chain data reveals that the attacker has transferred the assets to two other platforms, namely, Compound and Aave.
Furthermore, information from the popular DeFi data monitoring resource DeFi Pulse reveals that the total value locked (TVL) in USD in dForce was dramatically reduced from $25 million to about $10,000.
Meanwhile, Mindao Yang, the founder of dForce, said in a Telegram message that the lending platform is currently paused as they continue to investigate the issue. He advised users not to deposit any funds through it.
Interestingly enough, the bad news comes just a few days after dForce closed a successful financing round of $1.5 million led by Multicoin Capital, which also included co-investors China Merchant Bank International and Huobi Capital.
The Risks of DeFi
While decentralized finance is a concept that undoubtedly poses a lot of potential benefits, it’s essential to recognize that it’s still a very nascent field.
Just a couple of months ago, CryptoPotato reported that almost $1 million worth of ETH was compromised following two attacks on another DeFi protocol called bZx.
Last year during Ethereal Summit, Vitalik Buterin discussed DeFi protocols and outlined a lot of their benefits. However, he also warned that people shouldn’t be encouraged to put their money into them because they are yet untested and have a non-zero chance of failure.