SafeDollar (SDO) Stablecoin Finds “Safety” at the $0 Level After an Exploit Manages to Trick the Polygon-Based Platform’s Transaction Fee Algorithm
SafeDollar (SDO), a stablecoin pegged to the US Dollar, was not so safe after all. After being hit by an exploit that siphoned off $248,000 in USDC (USD Coin) and USDT (Tether), the coin’s price has plummeted to $0.
While details are scarce at the moment, it seems that SafeDollar was hit by an infinite mint exploit where the coin’s reward mechanism was gamed by withdrawing and depositing a small number of tokens in a loop and spoofing the algorithm into awarding a very large reward. The Twitter thread below details what may have happened:
Hello, the unroll you asked for: SafeDollar was exploited today and dumped on the open market for… https://t.co/M9YkF2XY65 Enjoy 🙂 🤖
— Thread Reader App (@threadreaderapp) June 28, 2021
The attacker then withdrew the gamed reward in $202,000 USDC along with $46,000 in USDT. Bear in mind that although SafeDollar had a market cap of around $248 million, its exit liquidity was only around $250,000. Consequently, the coin’s price plunged to $0 in the immediate aftermath of this exploit.
SafeDollar has now halted all trading and is currently investigating this hack. The stablecoin will also reportedly offer compensation to its liquidity providers, as per its Telegram channel:
“SafeDollar has been under attack. We have paused activities on SafeDollar and investigating the matter. IMPORTANT: PLEASE STOP ALL TRADING RELATED TO $SDO. We will announce the post-mortem after the investigation [is] done with [a] compensation plan for Liquidity Providers.”
Bear in mind that SafeDollar developers had published an analysis about a week back in which they detailed a previous exploit that had siphoned off 9,959 SDS tokens.
As mentioned earlier, SafeDollar is based on the Polygon network, a multichain scaling solution for Ethereum that facilitates fast and cheaper transactions by using Layer 2 sidechains – ancillary blockchains to the Ethereum main chain.
Earlier in June, Malt Protocol suffered a blow when its launch was hampered by bugs that essentially trapped its liquidity providers. Also, on the 17th of June, Titan token had collapsed after what it termed a DeFi bank run.
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