Balancer Suffers $116 Million DeFi Exploit: Community Reacts Amid Recovery Efforts
Balancer experienced one of the largest decentralized finance (DeFi) exploits recently, losing more than $116 million in staked Ether and liquidity pool tokens from its v2 contracts and several forks. The decentralized exchange (DEX) and automated market maker (AMM) quickly launched an investigation, revealing faulty access control vulnerabilities in its smart contracts. This flaw allowed attackers to withdraw funds directly from liquidity pools.
The exploit initially resulted in a $70 million loss, which escalated to $116 million. The attack primarily targeted liquid staking assets such as Lido’s wrapped staked Ether (wstETH) and StakeWise’s osETH. In response, Balancer offered a 20% white hat bounty to the attackers in an attempt to recover some of the stolen funds. The team also confirmed that they are cooperating with law enforcement and blockchain forensic experts to identify the culprits.
Community Scrutiny and Hacker Expertise Highlighted
Following the breach, community members scrutinized Balancer’s security measures, noting the extensive audits the protocol had undergone yet still suffered a major hack. “Balancer went through 10+ audits,” said Suhail Kakar, developer relations lead at the TAC blockchain. The attack also appeared to be a result of meticulous, months-long planning by a highly skilled hacker. Conor Grogan, director at Coinbase, pointed out that the attacker seemed experienced and possibly linked to previous exploits.
Balancer released a preliminary post-mortem report on Thursday, confirming that the $116 million hack targeted its v2 Stable Pools and Composable Stable v5 pools through a sophisticated code exploit.
Stream Finance Collapse Triggers Market Ripples
In related DeFi news, decentralized protocol Stream Finance disclosed a $93 million loss connected to an external fund manager. This event caused significant stablecoin depeggings and liquidity freezes across the ecosystem due to the associated assets’ instability.
DeFi analysts highlighted that the protocol’s collapse had a ripple effect, exposing millions in synthetic assets throughout the space. Researchers from Yields and More revealed over $284 million in loans and stablecoins linked to Stream Finance’s synthetic assets xUSD, xBTC, and xETH. Fund protocols such as TelosC and Elixir were among those most affected, with Elixir’s $68 million exposure accounting for roughly 65% of its stablecoin reserves.
As a consequence, Elixir pulled support for its synthetic stablecoin deUSD on Friday. They successfully processed redemption for 80% of all deUSD holders, which caused the token to lose its dollar peg.
RedStone Launches Credora: A DeFi Risk Ratings Platform
Amid recent market volatility that erased $20 billion in positions during October, modular oracle network RedStone unveiled Credora — a DeFi-native risk rating platform. Credora integrates real-time credit and collateral analytics into protocols like Morpho and Spark, offering dynamic risk scoring and default probability data via APIs.
This initiative represents a shift toward enhanced data-driven transparency and risk management in DeFi. It aligns with the broader industry trend of creating a safer ecosystem where oracles, auditors, and analytics firms work together to assess yield sustainability and collateral health.
Other notable players emphasizing verifiable creditworthiness as a cornerstone for DeFi’s next phase include Chainlink, S&P Global Ratings, and Hacken.
Ethereum Protocol Advocacy Alliance Forms to Influence Policy
A new coalition, the Ethereum Protocol Advocacy Alliance (EPAA), has been formed by leading DeFi protocols including Aave, Uniswap, Lido, Curve, Spark, Aragon, and The Graph. Supported by the Ethereum Foundation, the EPAA aims to strengthen Ethereum’s representation in Washington by balancing the outsized influence of centralized crypto companies on US regulations.
The alliance plans to engage directly with policymakers, providing education and technical expertise on decentralized infrastructure’s realities. It will focus on highlighting non-custodial systems and DeFi governance, ensuring that on-chain protocols have a voice in shaping crypto’s regulatory future.
Web3 Gaming and DeFi Lead October Sector Activity
Despite an overall decline in Web3 engagement, DeFi remained one of the most active sectors in October. According to a DappRadar report, DeFi accounted for 18.4% of decentralized application (DApp) activity during this period.
However, DeFi’s total value locked (TVL) fell by 6.3% to $221 billion in October and continued to drop by another 12% into early November, reaching $193 billion. This decline is largely attributed to the $20 billion liquidation event in October and the collapse of Stream Finance.
Nonetheless, some protocols like Raydium, Pump.fun, and Jupiter Exchange maintained strong usage levels amid the broader downturn.
DeFi Market Overview: Tokens in Decline
Data from Cointelegraph Markets Pro and TradingView showed that most of the top 100 cryptocurrencies by market capitalization ended the week in the red. The Stables Labs USDX (USDX) token fell over 69%, marking the largest weekly drop, followed by Paparazzi Token (PAPARAZZI), which declined by 54%.
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