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BonqDAO protocol suffers $120M loss after oracle hack

An oracle hack allowed the exploiter to manipulate the price of the AllianceBlock token, leading to an estimated $120 million loss, according to Peckshield.

A small decentralized autonomous organization (DAO) has suffered a rather sizeable smart contract exploit, leading to an estimated $120 million being stolen from its protocol.

BonqDAO told its Twitter followers on Feb. 1 that its Bonq protocol was exposed to an oracle hack that allowed the exploiter to manipulate the price of the AllianceBlock (ALBT) token.

An independent analysis from blockchain security firm PeckShield has estimated the loss from the Bonq hack to be around $120 million, comprising $108 million from 98.65 million BEUR tokens and $11 million from 113.8 million wrapped-ALBT (wALBT) tokens.

While the exploit took effect over several transactions, the largest was $82.19 million at 6:32 pm UTC time on Feb. 1, according to multichain portfolio tracker DeBank.

Most of the high-scale transactions took place on the Polygon network.

How it happened

PeckShield explained that the exploiter was able to change the updatePrice function of the oracle in one of BonqDAO’s smart contracts, which meant that they were able to manipulate the price of the wALBT token.

This triggered the exploitation of the wALBT and BEUR. The hacker then swapped about $500,000 worth of BEUR for USDC on Uniswap before burning all 113.8 million wALBT to unlock ALBT.

On-chain security observer “Spreek” — who was one of the first to spot the exploit — told his 18,800 Twitter followers that the exploiter later dumped more BEUR and ALBT tokens for $500,000 in USDC and 144 ETH ($236,000).

PeckShield and others noted that the price of the BEUR and ALBT tokens went down considerably in a short period of time:

In a follow up tweet, BonqDAO said it has paused the protocol and is working on a recovery solution.

“Other troves remain unaffected. Bonq protocol has been paused. We’re working on a solution that will allow users to withdraw all remaining collateral without repaying BEUR in the troves. It will be released tomorrow morning CET,” it said.

AllianceBlock — the token issuers of ALBT — also shared the news on Feb. 1, explaining to its 51,300 Twitter followers that an exploiter managed to gain access to 113.8 million ALBT tokens.

The team is in the process of removing all liquidity on Bonq and has halted exchange trading, it said, adding that no smart contracts were exploited on AllianceBlock.

The announcement from AllianceBlock also added that they would mint new ALBT tokens to those impacted by the exploit up until the time of the announcement.

Related: Tribe DAO votes in favor of repaying victims of $80M Rari hack

BonqDAO is a decentralized autonomous organization that aims to provide self-sovereign financial services to individuals and businesses interest-free without giving up ownership of their assets.

AllianceBlock is a decentralized infrastructure platform that connects traditional financial institutions to Web3 applications.

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Covalent CEO: There’s an ‘unresolved backlog’ of unfilled Web3 data roles

The demand for on-chain analysts is set to further increase with Web3 data outgrowing Web2 data over the next 20-30 years, says Covalent's Ganesh Swami.

Ganesh Swami, CEO of blockchain data aggregator Covalent says there continues to be an “intense demand” for on-chain data analysts, that is yet to be satisfied. 

Speaking to Cointelegraph, Swami said that analysts are in “intense demand” as there’s a “real need” for data experts to “make sense” of on-chain data, explaining:

“There is an unresolved backlog of unfilled data-driven roles. This demand is a testament to how eager blockchain and non-blockchain companies alike are to make sense of their own and competitors’ on-chain data.”

Swami explained that while the demand for on-chain data analysts has yet to eclipse their Web2 counterpart, the growth of stablecoin usage, lending, and decentralized finance (DeFi) products over the last 18 months has led to increasing demand for the job title.

Swami said similar to data analysts in traditional industries, on-chain data analysts can expect to analyze a company's “reach, retention and revenue” metrics, except, in this case, the intelligence would be found on-chain data across multiple blockchains.

For example, in the case of an NFT project, Swami explained that "reach" would look into “how many people mint your tokens” and "retention" would relate to “what is the average holding period for these tokens" which is important to know whether investors are using these for “quick flips” or “holding on to them” long term.

"Revenue" is about sales — with blockchain analysts able to determine whether the sales are “concentrated through a handful of sales or distributed across multiple collections," he explained. 

But the role doesn't e there. Swami said that “to make better protocols and better serve users,” on-chain analysts can “cross-target users for marketing purposes or for user acquisition purposes” by reviewing what’s happened on competitor protocols, as the blockchain leaves what Swami likes to call “historical breadcrumbs.”

Swami also predicted that “Web3 data will exceed Web2 data” at some point in the next 20-30 years, and that Web3 data analysis “will be much, much bigger than the current business intelligence market, which is currently worth hundreds of billions of dollars.”

Addressing the current deficit of on-chain analysts, Covalent is set to launch a four-week “Data Alchemist Boot-Camp” on Oct. 19, which aims to train over 1,000 individuals in on-chain analytics.

“The only prerequisite to joining our Data Alchemist Boot-Camp is a desire to learn about Web3; come with that, and we’ll pay you to learn,” said Swami.

Related: Six helpful tips for Web3 companies searching for top data analysts

Over the near term, however, Swami said on-chain analysts will likely find more job opportunities in Web2 companies which are entering Web3, rather than Web3 native projects themselves:

“It will be faster and better for a Web2 company with their hundreds of millions of players or users to add over Web3 experiences, and what we can see, immediately what we have a line of sight to is Web2 businesses, adding a Web3 experience.”

“Companies such as Adidas and Samsung also now have departments of metaverse data scientists and analysts to serve the dashboards and metrics management,” he added.

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Bitcoin ‘whales’ and ‘fishes’ pause accumulation as markets weigh March 50bps hike odds

If Bitcoin benefited from quantitative easing, will it be hurt by quantitative tightening?

An uptick in Bitcoin (BTC) supply to whales' addresses witnessed across January appears to be stalling midway as the price continues its intraday correction toward $42,000, the latest data from CoinMetrics shows.

Whales, fishes take a break from Bitcoin

The sum of Bitcoin being held in addresses whose balance was at least 1,000 BTC came to be 8.10 million BTC as of Feb. 16, almost 0.12% higher month-to-date. In comparison, the balance was 7.91 million BTC at the beginning of this year, up 2.4% year-to-date.

Bitcoin supply in addresses with balance greater than 1,000 BTC. Source: CoinMetrics, Messari

Notably, the accumulation behavior among Bitcoin's richest wallets started slowing down after BTC closed above $40,000 in early February. Their supply fluctuated within the 8.09-8.10 million BTC range as Bitcoin did the same between $41,000 and $45,500, signaling that demand from whales has been subsiding inside the said trading area.

A similar outlook appeared in addresses that hold less than 1 BTC, also called "fishes," showcasing that they had halted the accumulation of Bitcoin in February as its price entered the $41,000-45,500 price range.

 Ecoinometrics' analyst Nick blamed the Federal Reserve's aggressive tightening plans for making Bitcoin whales and fishes "cautious," reiterating his statements from last week, wherein he warned that "if Bitcoin has greatly benefited from quantitative easing, it can also be hurt by quantitative tightening."

"This is why inflation not showing any sign of slowing down is a big deal."

No "dot plot" yet

On Wednesday, the Federal Open Market Committee released the minutes of its January meeting, revealing a group of thoroughly alarmed central bank governors looking more prepared to hike rates too much to contain inflation.

As for how fast and how far the rate hikes would go, the minutes did not leave any hints.

Vasja Zupan, president of Dubai-based Matrix exchange, told Cointelegraph that the Fed fund futures market now sees a 50% possibility of a 50bps rate hike in March, a drop from the previous 63%. But the minutes themselves do not discuss a 0.5% interest rate increase anywhere.

"Of course, the mixed macroeconomic outlook has left Bitcoin's most influential investors — the whales and long-term holders — in the dark," asserted Zupan, adding:

"The top cryptocurrency has been cluelessly tailing day-to-day trends in the U.S. stock market. However, I see it as weighted and not long-term significant, especially as the Fed bosses—hopefully—shed more light on their dot-plot after the March hike."

Strong hodling sentiment

Researcher Willy Woo provided a long-term bullish outlook for Bitcoin, noting that its recent price declines, including the 50% drawdown from $69,000, were due to selling in the futures market, not on-chain investors.

Bitcoin demand/supply among holders versus futures market. Source: Willy Woo

"In the old regime of a bearish phase (see May 2021), investors would simply sell their BTC into cash," Woo wrote in a note published Feb. 15, adding:

"In the new regime, assuming the investor wants to stay in cash rather than to rotate capital into another asset like equities, it's much more profitable to hold onto BTC while shorting the futures market."

Related: Bitcoin briefly dips below $43K as Fed says rate hike ‘soon appropriate’

As Glassnode further noted, in the May-July 2021 session, investors' de-risking in the Bitcoin futures market coincided with a sale of coins in the spot market, which was confirmed by a rise in net coin inflow to exchanges. But that is not the case in the ongoing price decline, as shown in the chart below.

Bitcoin exchange net position change. Source: Glassnode

"Across all exchanges we track, BTC is flowing out of reserves and into investor wallets at a rate of 42.9k BTC per month," Glassnode wrote, adding:

"This trend of net outflows has now been sustained for around 3-weeks, supporting the current price bounce from the recent $33.5k lows."

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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