The decentralized finance (DeFi) protocol Echo, focused on Bitcoin, was attacked on Monday, marking the latest in a series of attacks on DeFi this year. The root cause of the attack has not yet been determined.
The vulnerability was initially discovered by an anonymous cryptocurrency influencer. Around 5:55 PM Eastern Time on Monday, DCF God posted the news on X. Other on-chain analysis accounts on the social media platform also shared the discovery and provided additional details.
According to ChainLens, the attacker minted 1,000 eBTC (Bitcoin liquidity tokens issued by Echo Protocol on Monad) and deposited 45 eBTC as collateral into the DeFi lending protocol Curvance, borrowing approximately 11.29 WBTC, worth around $867,700 at the time.
The attacker then bridged the WBTC to Ethereum and exchanged these tokens for ETH. The 385 ETH were transferred to the cryptocurrency mixer Tornado Cash.
According to reports, the attacker still holds 955 eBTC, worth $73.2 million. Lookonchain founder Nick Sawinyh wrote in a post: “The remaining 99% of the fake supply is held in the attacker’s wallet, as Monad’s lending and decentralized exchange (DEX) depth can no longer accommodate more.” wrote
Monad and Curvance subsequently acknowledged the vulnerability. Monad co-founder Keone Honsaid its security researchers are currently investigating the incident, while assuring that the network itself remains unaffected.
Hon added in a follow-up post: “Security researchers determined after review that approximately $816,000 appears to have been stolen due to this exploit of [Echo Protocol's] eBTC.”
Meanwhile, Curvance wrote that its fully independent market architecture protected other markets from being affected, and there is no indication of any compromise in its smart contracts. Curvance also stated that, as a precaution, it has suspended the affected Echo eBTC market.
Echo Protocol is a multi-chain BTCFi protocol initially launched as a Bitcoin liquidity and yield platform, with significant presence on Aptos.
Before the Echo vulnerability incident, 13 security breaches had already occurred this month in DeFi protocols. DeFi Llama includes the exploitation of Verus’s Ethereum bridge, resulting in a loss of $11.6 million, which occurred on May 17.
This is a developing news story.