Decentralized finance technology continues to be an emerging field; some banks have expressed interest in DeFi solutions but only if they can exert some level of control with regard top security. This concern was underscored over the weekend as 183 Ethereum tokens issued on the Decentralized Autonomous Organization known as Force were stolen through a series of attacks.
The Force blockchain network (ForceDAO) is a new DeFi project that intends to compete in a very crowded field. In essence this project relies on a distributed ledger controlled by the xFORCE smart contract, which in turn runs in a manner similar to an advanced hedge fund. To a great extent, the ForceDAO development team would like to see the project being used by Wall Street investment banking firms that apply quantitative logic to their market positions. An engineering flaw in the ForceDAO network prompted hackers to exploit the transfer function of native tokens to steal the equivalent to $366,000 worth of ETH. At one point, the attackers had initial control of more than 14 million Force tokens, but project managers were able to take them back.
The losses from this ForceDAO incident translated into a steep drop in the Force currency exchange price. In the midst of the attack, trading volume of Force tokens was very high, but most trades were conducted by investors who rushed to enter sales transactions. Once the attack and the recovery process were discussed on social media channels, day traders rushed to scoop up the battered Force tokens, thus causing a market rally with an appreciation close to 175%. Force tokens are bound to be very volatile for this reason,
ForceDAO is hardly the only DeFi project that has been targeted by hackers; in fact, cybercrime groups are known to pay very close attention to news related to the DeFi sector. Whenever a new project goes live with a new blockchain network, you can count on it being targeted by cryptocurrency hackers. Information security researchers are starting to set up DAO honeypot servers in an attempt to gain more field intelligence on how these cybercrime outfits operate.