Lending platform DeFi Alchemix suspended one of its contracts after a bug inadvertently allowed some withdrawals, leading the safe to become under-guaranteed.
Alchemix is a rather innovative and complex platform in the DeFi space. When you take out a loan, the collateral you use is used through Yield Farming – a way to generate a return in DeFi. The interest that this generates is used to repay all or part of the loan.
alETH is an ether backed token (ETH). DeFi users can exchange other tokens linked to the value of ETH for alETH. They can then use alETH for loans on the Alchemix platform, or simply trade it like any other token.
During today’s harvest – when token rewards are collected and distributed proportionately to those holding tokens in the pool – a bug in the system led to withdrawals that should not have been allowed.
“TL; Alchemix debacle DR: The last harvest returned 100% of ETH funds to all ETH borrowers treated by the system as repaid debt, thus allowing for withdrawals. In short, alETH is currently under-guaranteed ”, tweeted a pseudonymous researcher known as FAANGanon, who works for crypto trading company Alameda Research.
Billionaire Mark Cuban spoke on Alchemix’s Discord channel, acknowledging the “predicament” but encouraging the team to tweet about it and make an announcement on Discord. “More eyes on Alchemix than anyone hanging out here on Discord,” he said.
Alchemy then tweeted that there had been an incident with the alETH contracts and that the project was working on a solution and a post-mortem. He said the contract had been suspended, adding that “the funds are safe”.
The price of the Alchemix token has fallen 15% in the past 24 hours, to the current price of $ 549.