THORChain crashes wildly following a $7.6M security exploit

Image by Michael Treu from Pixabay
Image by Michael Treu from Pixabay
  • RUNE dips 16% following a cyber attack.
  • THORChain users will be reimbursed and further protected.
  • The hacker asked to return funds for a bounty.

YEREVAN (CoinChapter.com) — THORChain’s native token RUNE price is down by 16% day-on-day after a hacking attack. The protocol will take measures to return to operations as soon as possible.

On July 16th, the THORChain platform lost around 4,000 Ethereum units, estimated at around $7.6 million. (Depending on the Ethereum price, this number may vary). However, the decentralized cryptocurrency exchange has already taken steps towards recovery, promising a return of funds to investors. It is also offering a bounty to the hacker to return funds, as administrators have reported on the platform’s Telegram channel.

“While the treasury has the funds to cover the stolen amount, we request the attacker get in contact with the team to discuss return of funds and a bounty commensurate with the discovery.”

THORChain Announcements

The hackers could retract funds without notice as they manipulated deposit amounts to appear full when they were empty. To further prevent such destructive halts, the Chaosnet host will release an auto-solvency checker to reflect the actual value of deposits. Furthermore, they will seek auditing from security companies to make improvements to the system.

Although the rehabilitation is in process, the massive intrusion has reflected on the THORChain cryptocurrency RUNE. The digital currency has dropped by 16% this Tuesday, a weekly flop of about 45%. Is this a temporary setback for RUNE, or will the breach of security cause too massive of a sell-off in the market?

RUNE technical analysis is heavily bearish

The technical indicators show extremely bearish tendencies. The crypto reached its peak at $20.31 on the 18th of May and has fluctuated quite a bit to form a downward trend ever since. Declines followed multiple MA death crosses. The last cross took place when the halt was announced, while the other one loomed over the 100 and 200-day MA’s. 

RUNE is on a downward trend, currently at $3.5. Source: TradingView.com
RUNE is on a downward trend, currently at $3.5. Source: TradingView.com

Fibonacci time zones constructed based on the first two crosses intersect the chart exactly on pivotal moments of price changes. Thus, this technical tool helps detect future developments. As seen in the chart, all verticals cross over the price line at short-term support levels. Following this logic, the price will continue toggling on a new lower support level until August. 

Related: You may lose everything in DeFi, finance academic warns

The 14-day RSI also predicts a bearish position. At the time of press, the indicator has crossed the lower threshold at 29.38, signaling that the asset is oversold.

Recovery is still possible

If this attack was a red flag for some investors to remove their holdings from the exchange, it is an opportunity to buy the currency at a monthly low price. The fundamentals of RUNE are not as damning. Analysts at Wallet Investor report a one-year forecast at $16.79 and a five-year forecast of $67.24. 

The highly optimistic predictions about THORChain are maybe because the exchange is bettering its system’s security and functionality. On June 28th, THORChain synthetics launched on testnet. In partnership with Synthetix, a decentralized finance (DeFi), THORSwap will offer transaction possibilities with synths. Moreover, the short tweet teased an interest-bearing value proposition as well.

THORChain announces the launch of synths.

Cyber attacks on DeFi platforms are not a novelty. However, the Yearn Finance flash loan attack worth $11M, the Alpha Finance exploit at $37M, the Meerkat Finance halt of 13 million BUSD are some of the largest DeFi hacks in 2021 alone. 

Related: DeFi boom underway as Bitcoin rally stalls: UNI, COMP, and MKR in focus

These incidents shake the trust in Defi. Nevertheless, this can be an excellent opportunity to buy DeFi assets until the players improve their security and develop further, increasing in price.

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