Zabu Finance Suffers First Big Exploit in Avalanche Defi, Loses $3.2 Million

The first major hack in relation to the chain involved Zabu Finance, which is a decentralized yield-farming protocol on Avalanche. According to reports, an exploit allowed an attacker to steal $3.2million in tokens from the protocol. According to reports, the core of the exploit was caused by a flaw in the Spore token’s design. This allowed for the production of 4.5 billion Zabu, which were then successfully withdrawn from the platform. The currency’s value increased to 0.

Zabu Finance suffers its first big avalanche hack

was confronted by Zabu Finance, a decentralized yield-farming protocol that is built on top the Avax blockchain. An attacker exploited a vulnerability to withdraw $3.2 million worth cryptocurrencies. Spore, a pool of tokens that allowed for the attacker to mint more than 4.5 billion native tokens of the protocol (Zabu), was the root of the attack.

These tokens were then sold in defi trading protocols that leverage Avalanche such as Pangolin or Trader Joe. To minimize risk, the exchange opened withdrawals so users could withdraw their funds. The massive selloff caused the price of Zabu to drop to zero. This resulted in investors losing large amounts of their token-owned funds.

The protocol presented an immediate plan to reimburse users for any losses.

Reimbursement plan

Zabu provided a schedule for recovery and reimbursement that will return funds to the most severely affected. It is currently rebuilding its farming protocols and plans to launch NFT to represent the debt to each protocol. It declared:

Airdrop NFTs will be given to affected Stakers. These are the compensation rights. We use protocol revenue to purchase them back later. Protocol revenue includes NFT sales and Autofarm fees. Launchpad fees are also included.

Zabu stated that all revenue from its next NFT project, Zabu the Tiger, would be used to compensate prehackers.

CoinGecko data shows that the price of the zabu token has fallen from $0.004 before the hack. Users were informed by the team that they had implemented an ongoing audit after the hack to prevent these types of problems from happening again.

Despite the hack AVAX still increased its seven-day total value locked (TVL), by 17.44% to $2.37 Billion this week. Defi projects also thrive on the network.