Decentralized exchange Dodo was hacked for $3.8 million in the last 24 hours. They are, however, expecting around half of those funds to be returned.
Decentralized exchange Dodo announced on Twitter that the hack targeted V2 protocols WSZO, WCRES, ETHA, and FUSI. The exchange added that the other pools were unaffected and the hackers exploited only the pools created by users.
The hackers stole $1.15 million in the stablecoin Tether and $900,000 in WCRES. The rest of the money lost is expected to be returned shortly.
Decentralized exchange Dodo explained that a bug enabled attackers to create counterfeit tokens and use flash loans to collect real tokens. Flash loans are extremely fast loans that occur within a single transaction. The hackers would then siphon the tokens out of the platform and into their own wallets.
This is the latest in a series of DeFi hacks, bringing forth concerns on the riskiness of the space as a whole. Last week Meerkat Finance was hacked for $31 million on its first day. In that case however, some believe it was a “rug pull” from the creators of the project. Also in late February the Furucombo protocol was hacked for $14 million.
Decentralized Exchange Dodo Loss is Low in Comparison
In comparison to those losses, the $2 million loss from Dodo is a pretty low amount. It looks as if confidence in the protocol overall has not been shaken and the price of its governance token has remained stable as well.
Managing partner of Puzzle Venture Jerry Zhou also backed Dodo in a statement. “I can understand some investors and crowd-pooling projects feel frustrated about DODO,” Zhou said. “But you should know the road is never smooth. As far as I know, they have made significant progress in recovering the funds. I believe they will show a good result in the end.”
Dodo was created in order to compete with Uniswap, the biggest Ethereum-based decentralized exchange. It aims to replace Uniswap’s Automated Market Maker system with a new algorithm. Dodo believes the Proactive Market Maker would provide 10X more liquidity.