Market Manipulation Attack Costs Celo Protocol Moolah Market Over $10 Million

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Last Updated on October 19, 2022 by Bitfinsider

Following a market manipulation attempt that occurred early on Wednesday morning, approximately $10 million worth of tokens belonging to the Celo-based lending and borrowing protocol known as Moola Market were stolen but were eventually recovered.

It was the second attack of its kind in the past few weeks. The perpetrators manipulated the pricing of Moola’s native MOO tokens in order to borrow collateral against their positions, which had the effect of depleting the protocol.

Developers of Moola have stated that the attack began in the late hours of Tuesday night in Asia. “An unknown attacker began manipulating the price of MOO on Ubeswap,” the researchers stated in their paper. “This allowed the attacker to manipulate the MOO TWAP price oracle that is employed by the Moola protocol.” Oracles are third-party services that bring data that is stored outside of a blockchain into the blockchain itself.

The attacker used MOO as collateral to borrow a substantial quantity of cUSD and cEUR, two stablecoins based on Celo that are pegged to the U.S. dollar and euro respectively, and CELO from the protocol. As a result, the attacker was able to effectively deplete the monies held by the protocol. At that moment, all trading activity on the site was halted.

The developers have stated that they alerted the appropriate authorities as soon as they became aware of the problem. After some time had passed, the team received confirmation of their involvement from an individual who identified themselves as the attacker. This person was in possession of the private key, which is a cryptographic value that functions similarly to a password for a certain block on the blockchain. The private key allowed access to the stolen funds.

After then, according to Moola, they were able to bargain with the aggressor. At the time this article was written, Moola had recovered more than 93 percent of the cash that had been stolen about 12 hours following the incident.

In the meantime, the community has discussed the possibility of putting forward a governance plan to stop future attacks of a similar nature. The goal of the protocol is to reduce the liquidation thresholds that regulate MOO’s usage as collateral on the platform, which will, in effect, “remove it as a valid collateral asset.”

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