Decentralized finance firm Thala has resumed operations following a significant security breach that compromised its liquidity pools, resulting in a loss of approximately $25.5 million.

In a recent announcement, Thala informed users that all services have been restored, with the exception of its staking service, which is currently undergoing a patch and audit.

Security Breach and Immediate Response

On November 15, Thala experienced a security breach that allowed an attacker to withdraw substantial amounts of liquidity tokens. This vulnerability was traced back to the protocol’s v1 farming contracts, which had been updated recently.

Following the breach, Thala promptly suspended all services and managed to freeze $11.5 million worth of Thala-related assets, including its native THL token and the Move Dollar (MOD). This swift action was facilitated by the Move programming language, which supports the Aptos blockchain. Move’s unique features, such as treating digital assets as first-class resources and including native functions like freeze and burn, were instrumental in this process.

Collaborative Efforts for Recovery

Thala collaborated with SEAL 911, a group of DeFi security experts, and Ogle, an on-chain investigator, along with law enforcement agencies to trace the hacker responsible for the breach. The hacker agreed to return all user assets in exchange for a $300,000 bounty.

Thala has assured users that all positions will be made “100% whole,” and no action is required on their part.

Impact on Thala and Broader DeFi Community

As a result of the incident, the total value locked in Thala has decreased from $234 million to $196 million, and the THL token has seen a decline of over 31% since the breach.

This incident is one of several recent attacks on decentralized protocols. Notably, on October 16, DeFi lender Radiant Capital was exploited, resulting in a loss of approximately $50 million. Additionally, in September, staking protocol Bedrock lost an estimated $2 million due to a bug that allowed cyber thieves to drain funds from liquidity pools.

Industry-Wide Concerns

According to blockchain security firm PeckSheild, around $88.4 million was lost to crypto hacks in October alone, with total on-chain losses reaching $181 million.

The increasing frequency of these attacks highlights the ongoing need for robust security measures within the DeFi space. Investors and users are advised to stay informed and exercise caution when engaging with decentralized finance protocols.

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