Mango Markets, a decentralized finance (DeFi) trading platform on the Solana blockchain, has become the latest victim to hackers who stole $117 million from the platform. According to a tweet from Mango Market, the hack was caused by a price manipulation on the native MNGO token. 

Mango Markets has offered the attacker to contact them at blockworks@protonmail.com to collect a bug bounty in exchange for returning the funds. The price of the native token, Mango, is down over 40% at the time of writing. The hack comes less than a week after Binance suffered a $570 million loss. 

How the Hackers Stole Money?

According to OtterSec, a security audit that powers blockchain, the hacker manipulated the price of native token Mango (MNGO) collateral, draining the platform of massive loans. A $116 million loan was then taken out by the hacker, leaving Mango’s treasury with a negative balance of 116.7 million.

Genesis head of derivatives Joshua Lim tweeted that the hacker used two accounts to execute the attack, going short on one and hedging his position on another. The attacker deposited 5 million USD Coin (USDC) to the network before opening an unusually big long position. He bought 438 million Mango tokens and quickly totaled $420 million in unrealized profits. The price of MNGO increased by approximately 1,000%, elevating the collateral value of the hacker’s account. He eventually wiped out the protocol when he took more than $116 million in liquidity from all tokens available.

How Safe Are Decentralized Trading Platforms

Decentralized finance (DeFi) trading platforms use smart contracts to execute transactions. Since no third party is involved, hackers take advantage of the loophole to exploit the network and drain money out of it.  The way hacker manipulated the price of the Mango token couldn’t be achieved on a centralized crypto exchange since there when a trader places a high bid on one asset, its price increases everywhere. It’s not possible to make a huge profit immediately. 

As of now, Mango Markets has also been frozen to prevent further deposits. The hack has resulted in a 23% drop in the total value of assets locked in the Solana system, from $1.32 billion to $997 million. It is the first time since July 2021 that Solana’s TVL has fallen below $1 billion.

The Bottom Line

With the growing market for cryptocurrencies, hackers have become more aggressive, taking advantage of the system’s vulnerability. So far, this year, crypto hackers have stolen more than $2 billion, according to blockchain research firm Chainalysis. The number could grow more in the coming months. Decentralized finance and blockchain promise security, but it doesn’t seem to be entirely accurate.