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DeFi

Synthetix suffers oracle attack, more than 37 million synthetic ether exposed

June 24, 2019, 6:46PM EDT

Synthetix, a synthetic asset issuance platform built on Ethereum, experienced an oracle attack which netted the attacker over 37 million sETH, according to Etherscan. However, the true dollar value is difficult to calculate at this time given the relative illiquidity of sETH on secondary markets.

In a statement made in the Synthetix Discord channel, CEO and Co-Founder Kain Warwick noted, "There has been an incident with the price feed of sKRW, we are currently investigating the root cause, but during the time when the price feed was returning the wrong value we believe an automated arb bot converted into sKRW and then into sETH."

Warwick said that he believes this was done automatically by an arbitrage bot, and asked for the owner of the bot to contact Synthetix to help resolve the issue, offering a bug bounty as a reward. According to its Discord channel, the Synthetix team has complete control over its smart contracts, and until the issue is resolved has disabled transfers within the system.

Synthetix is the latest synthetic asset platform to gain attention within the decentralized finance ecosystem. Structured as a multi-tier issuance platform, collateral type, and exchange, Synthetix permits any user to mint synthetic assets, from cryptocurrencies to fiat currencies to derivatives. 

Earlier this month, The Block's Teo Leibowitz published a report on Synthetix noting that despite its increasing popularity and seamless user experience, the mechanisms used to guarantee the value of minted synthetic products are largely deficient, exposing holders to significant risk.

"The irony of this situation is that the currently suboptimal design of the Synthetix platform makes it actually very difficult to realize gains from this kind of attack," said Leibowitz.

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