Balancer Users Withdraw $100M On Critical Flaw Fears

Balancer, one of the biggest decentralized crypto trading projects on the Ethereum Mainnet, has urged users to withdraw their funds after the discovery of a critical flaw that put tens of millions of dollars in crypto at risk, CoinDesk reported.

Users rushed to withdraw according to a pseudonymous contributor, Xeonus, who spoke to CoinDesk. On August 22, the protocol’s total value locked lost almost $100 million.

A bug in high-interest liquidity pools

Balancer supports cryptocurrency trading via liquidity pools contributed by users rather than traditional market makers. On August 22, the protocol caught wind of a bug in its boosted high-interest-paying pools.

The pools were paused to prevent draining

When the news emerged, the decentralized protocol was shut down. The team of the protocol, which is governed by holders of the native token BAL, paused a number of pools to prevent malicious entities from using the flaw to drain them.

However, Xeonus said some pools “could not be paused and therefore remained at high risk.” Customers were asked to withdraw their funds as a security measure.

$10M remains at risk, emergency measures taken

According to Balancer’s latest estimate, around $10 million remains at risk, which is around 1.4% of the total value locked.

The project team hasn’t publicized the bug yet, but they plan to release a post mortem once the vulnerability has been eradicated. They have taken urgent measures to secure user funds and at least 80% of those are now safe.

No funds stolen, but BAL was hurt

While no funds have been stolen and the protocol’s partners are aware of the flaw, BAL holders were slightly spooked. According to Coinmarketcap data current at the time of publication, one BAL was trading for $3.50, down 2.53% in the last 24 hours. It has made a slight recovery, but it’s still down by over 50% from its 2022 peak.