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Ethereum News Update: DeFi Faces Security Turmoil as $128M Breach Sparks $1.36B Disruption

Ethereum News Update: DeFi Faces Security Turmoil as $128M Breach Sparks $1.36B Disruption

Bitget-RWA2025/11/04 09:28
By:Bitget-RWA

- A $128M exploit targeting Balancer's DeFi protocol triggered $1.36B in crypto liquidations and pushed ETH below $3,500. - Attackers exploited V2 vault vulnerabilities to siphon $70M+ across Ethereum , Arbitrum, and five other blockchains within minutes. - Lido and Beets Finance reported partial breaches while Aave remained unaffected, highlighting DeFi's interconnected security risks. - Market panic overshadowed recent crypto optimism , with experts warning about persistent smart contract vulnerabilities

Ethereum’s primary cryptocurrency

dropped below $3,500 on Monday after a significant exploit led to the liquidation of more than $1.36 billion in digital assets. The attack targeted the DeFi protocol, as detailed in . This incident, among the largest in 2025, saw over $128 million drained from several blockchains, sparking widespread withdrawals and undermining confidence in decentralized finance platforms.

The breach unfolded quickly, with hackers extracting 6,587 WETH (valued at $24.46 million), 6,851 osETH ($26.86 million), and 4,260 wstETH ($19.27 million) from Balancer’s pools within minutes, according to

. Blockchain data indicated the exploit affected , , Base, and five additional networks. Sonic alone lost $3.4 million, which accounted for 2% of its total value locked, TradingView reported. Experts traced the exploit to a major flaw in Balancer’s V2 vaults, where insufficient authorization checks enabled unauthorized withdrawals through internal balance functions, as reported by .

Ethereum News Update: DeFi Faces Security Turmoil as $128M Breach Sparks $1.36B Disruption image 0

Balancer’s governance token, BAL, tumbled more than 15% in a single day as the community struggled with the aftermath, according to a

report. Other major DeFi projects connected to Balancer also suffered consequences. Lido, a liquid staking service, acknowledged that some Balancer V2 pools were affected but assured users that core funds remained safe, Yahoo Finance noted. , a leading lending platform, highlighted that it was not exposed to the compromised Balancer components, according to Yahoo Finance. Meanwhile, forked protocols such as Beets Finance reported $3 million in losses, illustrating the systemic risks within interconnected DeFi networks, CoinDesk reported.

This exploit has brought renewed attention to the importance of smart contract security, especially for protocols managing billions in assets. Balancer, which previously experienced hacks in 2020 and 2023, now faces increased demands to fix its vulnerabilities, Yahoo Finance stated. “This should serve as a warning to the sector,” a blockchain analyst commented, pointing out that even established platforms can fall victim to advanced attacks, as reported by Yahoo Finance.

The market’s reaction was immediate and dramatic. Ethereum’s value slipped below $3,500 for the first time in months, and total crypto liquidations exceeded $1.36 billion in just one day, TradingView reported. This turmoil stands in stark contrast to the earlier optimism following a “cooler” U.S. CPI report, which had briefly sent

above $111,000 and led to $921 million in institutional crypto inflows, according to a . However, the Balancer hack has shifted attention to the vulnerabilities of DeFi, prompting investors to reconsider their exposure to protocols with poor security histories, TradingView added.

Balancer’s official response has so far been limited to a short post on X confirming an ongoing investigation, leaving users uncertain about recovery plans, Yahoo Finance reported. Community members are calling for greater transparency and compensation for those affected. “This is about more than just fixing code—it’s about restoring trust,” a DeFi developer remarked.

As the probe continues, the event underscores the delicate balance between innovation and security in the rapidly changing crypto world. With DeFi protocols now managing over $60 billion in assets, even small flaws can have devastating effects, CoinDesk noted. For now, the market remains tense, awaiting Balancer’s next move in what could become one of the most significant DeFi breaches to date.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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