DeFi protocol vulnerability leads to nearly 10 million dollars in losses, victims describe their plight in seeking justice

It has been over a week since a certain DeFi protocol was attacked by hackers. On June 26, a security vulnerability appeared in the stablecoin market of the protocol, resulting in a loss of approximately $9.6 million in crypto assets. As one of the early users involved in mining for this protocol, 3D has released multiple videos advocating for rights following this theft.

3D has been involved in cryptocurrency since 2017 and started focusing on Decentralized Finance and arbitrage during the DeFi Summer in 2020. He is currently mainly engaged in mining work while operating a YouTube channel that focuses on DeFi arbitrage.

The total amount of funds damaged in this incident is approximately $38 million, primarily concentrated in the protocol's insurance pool. Chinese users have been more proactive in defending their rights, while English users have been relatively quiet.

Regarding the current solution, 3D indicates that users' principal has directly lost 15.5%. The project team has withdrawn approximately $2.3 million from the team and treasury, only covering about 20% of the total losses. The community hopes that the project team can take more action, but the project team's attitude is disappointing.

The initial reason for choosing to participate in this project was seeing a long-time follower post related content, which was later shared by a well-known DEX official. From the perspective of the project's operational logic, it seems more like an attempt to boost the usage of the stablecoin associated with that DEX.

In the aftermath, the project team showed a complete lack of crisis response awareness. They neither publicly addressed the hackers nor issued an announcement to explain the situation, let alone initiate any legal or accountability mechanisms. Compared to other mature Decentralized Finance protocols, they did not even take the most basic actions such as pausing contracts or contacting white hats.

The project's attitude towards the community is extremely arrogant and indifferent. They directly state that users of the insurance pool must bear the losses, even mocking, attacking, and banning users who question them. Their logic is that users who earn annualized returns must bear all the risks, a statement that has sparked strong dissatisfaction.

More seriously, hackers exploited vulnerabilities to mint a large number of stablecoins at zero cost and sold them, breaking the original over-collateralization mechanism. However, the project team has not yet paused the protocol, resulting in some users being locked out of their funds.

3D believes that having the insurance pool bear all losses has no precedent in DeFi protocols and completely breaks the bottom line of the industry. Users expect the insurance pool to only cover bad debts caused by market fluctuations, not losses from hacking.

Regarding the role of a well-known DEX in this matter, 3D stated that the project was designed to serve it, and the two have a close relationship. Without the endorsement of the DEX, this project would not have been able to raise so much capital. However, the DEX's immediate attempt to distance itself after the incident is disappointing.

The biggest challenge for current DeFi users in defending their rights is the lack of clarity regarding responsibilities and the absence of industry regulation. For most users, there are almost no effective channels for defending their rights. They can only rely on their own voices and organize actions, which leaves many feeling disheartened.

3D suggestions: When evaluating new projects, focus on their business model, protocol operation mechanism, team background, and other information. He also reminds that even if a project has been audited, it cannot fully guarantee safety.

The biggest blow to 3D from this incident is not the economic loss, but the confidence in the industry. If all project parties adopt a similar attitude, the sustainability of the entire industry will be seriously questioned. Some users have already started to withdraw their funds, only holding Bitcoin.