- A newly-discovered vulnerability posed a threat to Balancer V2 pools.
- Balancer’s TVL declined as prices saw red.
On 22 August, Balancer [BAL] encountered a vulnerability that impacted several V2 pools. Consequently, Balancer urged customers to withdraw their tokens, as the vulnerability posed a substantial risk to millions of dollars.
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A balancing act
The decentralized protocol, which facilitates trading through user-contributed liquidity pools, was notified about a bug in its high-interest-paying boosted pools on 22 August.
This disclosure prompted the protocol, governed by BAL token holders, to implement a lockdown, activating Balancer’s crisis response team and halting numerous pools to prevent potential draining.
NOTE:
The majority of funds on Balancer are safe.
Only 1.4% of the total TVL is at risk, and only boosted pools are affected.
Several pools are paused to mitigate risks and will remain so, with users advised to withdraw liquidity as soon as possible.https://t.co/xcT1OfALs2
— Balancer (@Balancer) August 22, 2023
As per Balancer’s latest assessment, approximately 1.4% of the total value locked, equivalent to around $10 million, remained exposed to risk at press time.
A few wstETH and stMATIC pools were also impacted during this period. Moreover, Lido, through Twitter, advised users to withdraw liquidity from these pools as soon as possible.
Balancer has received a report of a critical vulnerability affecting certain pools, including a few (w)stETH and stMATIC pools.
Users are advised to withdraw liquidity ASAP. https://t.co/ogEobqGd56
— Lido (@LidoFinance) August 22, 2023
At the time of writing, the protocol had not given any updates about the nature of the vulnerability or what measures had been taken to fix the state of the various pools affected.
State of the protocol
Taking a look at the code commits made on the Balancer GitHub indicated that development activity for Balancer had slowed down at the time of publication. The security of various pools on the protocol may have been overlooked due to this.
According to Token Terminal, code commits on the protocol fell by 24.4% in the last week. The Total Value Locked (TVL) of the protocol also declined by 9% in the last seven days.
Source: Token Terminal
Realistic or not, here’s BAL’s market cap in BTC’s terms
Similarly, the price of BAL fell significantly over the last week. The velocity of the token also declined drastically, implying that the frequency at which the token was trading had plummeted.
At press time, BAL was trading at $3.46.
Source: Santiment
