Beanstalk’s Stablecoin Protocol Relaunches 4 Months After $182 Million Exploit

An attacker took use of the decentralized finance (DeFi) technology Beanstalk Farms earlier this year by acquiring a majority interest in tokens and utilizing that position to take advantage of the governance structure.

As the smart contracts and governance processes used to execute the transfer had worked as intended, it should be noted that it was not regarded as a hack, but the governance exploit did drain $182 million from the project for the credit-based stablecoin system.

Replant

Just under four months after falling down, Beanstalk has revived its protocol as it strives to regain the $100 million market capitalization it had before its stablecoin assault in April. In a vote that ended on August 5, users who owned more than 99 percent of the project's stalk token supported the relaunch.

The project's protocol governance has been transferred to a community-run multi-signature wallet as part of the relaunch event known as the "Replant" until "a secure on-chain governance mechanism can be established." Five out of the nine validators selected by Beanstalk developers must now verify governance choices due to enhanced multi-signature security.

The Root Protocol announced a $9 million seed investment to establish financial, commercial, and sports betting markets on Beanstalk, and new application development is already under progress on the network. Nima Capital, Soma Capital, Manifest Crypto, and Road Capital all contributed to the equity round, which was headed by the former.

The group also said that it has successfully passed two protocol audits from respected smart contract auditing companies Halborn and Trail of Bits.

Financial Attack

When the Beanstalk team suggested soliciting $77 million from private investors back in May, the process to revive its stablecoin got under way. This came after one of the biggest flash loan vulnerabilities in history, which provided a malevolent user access to the protocol's governance for a brief while.

Investors purchase Beanstalk debt assets, which operate like time-vested bonds and pay interest annually. Beanstalk uses loans to sustain the value of its native stablecoin. In order for the project to function and maintain its planned $1 peg, it depends on a decentralized credit facility, decentralized pricing oracle, and governance community.

The initiative planned a fundraising event called the "Barn Raise" to replace the monies that had been stolen while planning a strategy for relaunching. In order to borrow the $77 million, Beanstalk will issue 77 million fertilizer tokens for 1 USDC apiece in return for debt with interest rates as high as 500%.

According to the most recent statistics from Chainalysis, during the first half of this year, hackers stole $1.3 billion from exchanges, platforms, and private companies. DeFi methods have been the source of over 97 percent of all bitcoin thefts, up from 72 percent in 2021.