Users of DeFi product Meerkat Finance, a suspect Yearn Finance copy, has exit scammed, taking $31 million worth of assets with it.
Compare The Meerkat
In the DeFi markets, Meerkat Finance is known as the Yearn Finance (YFI) copy. Meerkat Finance’s token MKAT is down after a supposed exploit, leading to a loss worth $31 million, comprising just under $14 million worth of BUSD and 74,000 BNB.
MKAT, which runs on the Binance Smart Chain (BSC), saw its vault breached through an exploit that enabled a change in ownership of the DeFi platform’s smart contract address.
Following this, a Binance Coin (BNB) address named “FakePhishing17” saw 73,635.23 BNB enter it, originating from the smart contract in question. Another address received the $14 million BUSD in a series of smaller transactions.
The Meerkat team initially responded to the transactions, claiming they were the result of an external hack. However, they have since been silent, with users unable to access the MKAT application or website.
Accordingly, some in the MKAT community suspect that the events are part of an internally planned exit scam often labeled a “rug-pull” in crypto-speak. BeInCrypto cannot confirm these suspicions at press time.
Hacks, Exploits and Comebacks
Indeed, the MKAT hack exploit follows a litany of exploits that plagued the DeFi space in the first two months of this year.
In February, Cream Finance (CREAM) and Alpha Finance Labs (ALPHA) suffered an exploit that saw a malicious party make use of an idle liquidity pool intended for a future upgrade of HomoraBank.
In this case, the hacker ‘locked’ $37.5 million in a debt obligation between protocols on the two platforms. However, despite being of more value than the MKAT exploit, user funds were entirely safe.
Moreover, both teams and famous DeFi developer Andre Cronje (who works on the CREAM team) responded quickly to the attack. The attack came just a few weeks after ALPHA’s Homora v2 launch, potentially explaining the idle liquidity pool’s presence.
The DeFi Experiment
Despite the hacks, nearly all successful DeFi projects – including Aave (AAVE) YFI – have come back stronger from similar events.
Indeed, the “test in prod” approach to DeFi popularized by Cronje makes the probability of such events more likely.
The argument in favor of that approach, however, is that it encourages experimentation. It also encourages adoption. If the cryptocurrency space is to revolutionize finance truly, it needs to experiment.
Thus, such events are not at all definitive of the success of these projects. More, it is the response, iteration, and future development following such exploits that will inevitably characterize the best projects in DeFi.
In order to have the revolution, the experiment must continue.