Arbitrum ! How Did Hackers Steal $6.9 Million From Them?

What Is Arbitrum? How Did Hackers Steal $6.9 Million From Them?

Table of Contents

• What Is Arbitrum? How Did Hackers Steal $6.9 Million From Them?
• What Is Arbitrum?
• How Did The Hacker Steal From Them?
• How Does An Arbitrum Work?
• History Of Arbitrum

The loan platform Lodestar Finance, which was built on Arbitrum, was compromised on December 10, 2022, according to a post sent on Saturday from the project’s Twitter account. According to the reports, Lodestar lost around $6.9 million.

But do you know what an arbitrum is?

What Is Arbitrum?

Ethereum is a very popular platform for building decentralised applications (DApps). However, a significant rise in usage in recent years has stressed the network to the breaking point, increasing transaction costs and bringing on continuous congestion.

While some parties believe that on-chain updates and alterations are the ideal strategies for expanding Ethereum, other groups are instead looking into alternative routes, which are referred to as second layer solutions.

The functionality of Ethereum smart contracts will be improved by a layer 2 solution called Arbitrum by enhancing its speed and scalability as well as by adding more privacy features.

The platform’s goal is to enable programmers to run unaltered Ethereum Virtual Machine (EVM) contracts and transactions on a second layer while benefiting from Ethereum’s excellent layer 1 security.

The low efficiency and high execution costs of existing Ethereum-based smart contracts, which have hurt the Ethereum user experience and frequently made transacting expensive, are some of the issues it is intended to address.

How Did The Hacker Steal From Them?

According to several sources, hackers took $6.9 million from the decentralised banking network Lodestar Finance. Their official Twitter account claims that the system was compromised and that deposits have been lost. Supply and borrow balances won’t change if they take into account the likelihood of a recovery because they have set all interest rates to zero.

Before providing Lodestar with plvGLP collateral and borrowing all available funds, the hacker, according to Lodestar, altered the exchange rate of the plvGLP contract. As a result, the hacker was able to pay out what they could. On Saturday, the team stated that a margin-ratio mechanism prevented them from paying out the plvGLP in full.

The borrowing and liquidation had stopped, according to the Lodestar crew. The total value locked in Lodestar dropped from about $7 million to approximately $11.06. Over the past 24 hours, Lodestar, the project’s native cryptocurrency, has lost 53% of its value relative to the US dollar.

Lodestar hit an all-time high of $0.718 per unit on November 23, 2022. LODE’s value has dropped by 76.1% since that time, with a 24-hour price range of about $0.13 to $0.369 per unit.

How Does An Arbitrum Work?

In Arbitrum, one type of technology is called an optimistic rollup. It makes it possible for Ethereum smart contracts to scale by sending messages between those on the Ethereum main chain and those on the Arbitrum second layer chain.

The majority of transaction processing is done on the second layer, with the results being recorded on the main chain, greatly enhancing speed and efficiency.

The act of leveraging publicly available data to recreate the complete chain’s history from an efficient log of occurrences is referred to as “rollup.” It is upbeat in that any validator can submit a rollup block and vouch for the accuracy of additional blocks.

Additionally, the software has a special virtual machine it constructed and names the Arbitrum Virtual Machine (AVM). This is where Arbitrum smart contracts are put into action.

It is atop EthBridge, a network of interconnected smart contracts that connects to the Arbitrum chain. Ethereum-compatible smart contracts are automatically translated to function with the AVM.

History Of Arbitrum

Ed Felton, a professor of public policy and computer science at Princeton, co-founded Offchain Labs, the company that produced Arbitrum in 2018.

He served as the President’s senior advisor and deputy chief technology officer at the White House from 2015 to 2017. Off-chain Labs has already reaped the rewards of large investments from Coinbase Ventures, Pantera, Blocknation, and Compound since its inception.

On May 28, 2021, Arbitrum One opened to developers after its rival Optimism postponed it. Since Uniswap and Sushiswap are now a part of Arbitrum’s network, it may soon surpass other Layer 2 solutions in popularity.