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Beanstalk’s Stablecoin Protocol Relaunches 4 Months After $182 Million Exploit
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After pausing its protocol and governance since April, Beanstalk Farms is back with its Replant reboot
Key Insights:
- The credit-based stablecoin protocol lost $182 million during a governance exploit in April this year.
- The project’s protocol governance has since moved to a community-run multi-signature wallet.
- Beanstalk launched a fundraiser dubbed the ‘Barn Raise’ to restore stolen funds.
Earlier this year, an attacker exploited the decentralised finance (DeFi) protocol Beanstalk Farms by buying a controlling stake of tokens and then using that position to exploit the governance structure.
Notably, it was not considered to be a hack, as the smart contracts and governance procedures used to carry out the transfer had functioned as designed, but the governance exploit did drain $182 million from the credit-based stablecoin protocol project.
Replant
As the project works towards reclaiming the $100 million market capitalisation it had prior to its stablecoin attack in April, Beanstalk has relaunched its protocol just under four months after going offline. Users holding more than 99% of the project’s stalk token backed the relaunch in a vote that closed on August 5.
The relaunch event, labelled the ‘Replant’, has seen the project’s protocol governance moved to a community-run multi-signature wallet until “a secure on-chain governance mechanism can be implemented”. Enhanced multi-signature security means that five out of nine validators chosen by Beanstalk developers must now validate governance decisions.
New application development on the network is currently underway, with the Root Protocol announcing a $9 million seed round to develop financial, commerce and sports betting marketplaces on Beanstalk. The equity round was led by Road Capital, with participation from Nima Capital, Soma Capital and Manifest Crypto.
The team also confirmed that it has completed two protocol audits from leading smart contract auditing firms Trail of Bits and Halborn.
Flash Loan Attack
The Beanstalk team began the process to resurrect its stablecoin back in May, when it proposed raising $77 million from private investors. This was after the project experienced one of the largest-ever flash loan exploits which temporarily gave a malicious user enough funds to control the protocol’s governance.
Beanstalk works by using loans to support the value of its native stablecoin and investors buy Beanstalk debt assets that function like time-vested bonds, paying out an annual interest rate. Overall, the project relies on a decentralised credit facility, decentralised price oracle and governance community to operate and hover around its intended $1 peg.
While preparing a strategy to re-launch, the project announced a fundraiser dubbed the ‘Barn Raise’ to restore stolen funds. Beanstalk will sell 77 million fertilizer tokens for 1 USDC each and will borrow that $77 million in exchange for debt at up to 500% interest.
The latest data from Chainalysis shows that hackers stole $1.3 billion from exchanges, platforms and private entities during the first half of this year. Almost 97% of all cryptocurrency stolen has been taken from DeFi protocols, up from 72% in 2021.
About the Author
Mohadesa Najumiauthor
Mohadesa Najumi is a British writer who has worked within crypto, forex, financial technology, and the stock market industry. Mohadesa received her MSc in Political Science and International Relations at the University of Amsterdam.
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