Onyx Protocol to Relaunch After $3.8 Million Hack: Key Updates

Onyx Decentralized Finance Protocol Set to Relaunch After $3.8 Million Hack

In a significant turn of events, Onyx, a decentralized finance (DeFi) protocol, is gearing up for the relaunch of its open-source, permissioned financial network known as Onyx Core. This decision comes in the wake of a worrying security incident on September 27, which resulted in a hefty $3.8 million being stolen due to an unaddressed vulnerability.

Understanding the Hack and Its Implications

The exploit took advantage of a known security flaw, specifically in the NFTLiquidation contract, which was manipulated to inflate the self-liquidation reward. Blockchain security firm PeckShield highlighted that this same vulnerability had previously been exploited against Onyx in October 2023, underscoring the urgent need for reform within the protocol.

Immediate Response and Community Support

On the same day as the exploit, the Onyx team proposed the Onyx Improvement Proposal (OIP)-46. This proposal called for crucial changes to the protocol, including:

• Shutting down the Ethereum-based lending market.
• Reimbursing all lenders affected by the hack.

By September 29, the proposal enjoyed unanimous backing with no votes against, signaling strong community support for the necessary changes. The execution of OIP-46 is set for October 1.

The Path Forward: A Structured Relaunch

The restructuring plan involves moving the Onyx Protocol to operate as a closed-ended lending protocol on Onyx Core. This strategic pivot allows users to wrap non-fungible tokens (NFTs), real-world assets (RWA), and various crypto assets, thereby enhancing security and functionality.

Strengthening Security Posture

The proposed changes are specifically designed to boost the security of the Onyx Protocol against potential future attacks, including those exploiting similar vulnerabilities that have affected other projects in the crypto space. For instance, the Hundred Finance hack in April 2023 serves as a poignant reminder of how pervasive these security issues can be.

Crypto Hacks on the Rise: A Broader Perspective

According to cybersecurity experts from Cyvers, losses from crypto hacks have soared in the first three quarters of 2024, exceeding $2.1 billion. Centralized finance operators, such as crypto exchanges, have become prime targets, witnessing a staggering 984% increase in attacks year-on-year. The peak of these losses occurred in Q2, which alone accounted for $401 million in stolen funds.

In contrast, while the DeFi sector experienced a 25% drop in losses year-on-year for Q2, it still recorded a notable $171.3 million lost due to 62 hacking incidents. The incidents highlight the ongoing vulnerabilities that both centralized and decentralized platforms face in the rapidly evolving landscape of cryptocurrency.

Conclusion

The upcoming relaunch of Onyx Core after the recent hack exemplifies the resilience and adaptability of blockchain technology. The strong community support for necessary reforms serves as a crucial step in safeguarding the integrity of decentralized finance protocols and protecting user assets in a landscape fraught with risks.