Shalini Nagarajan

<div id="highlights-block_6357b63652665" class="highlights">
 <ul>
 <li>USN became “susceptible to undercollateralization during extreme market conditions,” NEAR said</li>
 <li>The situation will make it hard for projects to maintain long-term interest in their algorithmic stablecoins, a crypto exec said</li>
 </ul>
 
</div>



NEAR Protocol is attempting to avoid another <a href="https://cms.blockworks.co/tag/terra" target="_blank" rel="noreferrer noopener">Terra-like</a> situation.



The protocol’s native stablecoin USN, which had a trading volume of <a href="https://www.coingecko.com/en/coins/usn" target="_blank" rel="noreferrer noopener">$9.7 million</a> in the last 24 hours, is gradually winding down due to risks of undercollateralization, <a href="https://near.org/blog/statement-in-full-near-foundation-to-fund-usn-protection-programme/" target="_blank" rel="noreferrer noopener">NEAR</a> said in a statement on Monday.



NEAR is a blockchain project that seeks to rival layer-1 protocols including Solana and Ethereum. It launched its own algorithmic stablecoin, issued by Decentral Bank (DCB), in April.



But after the stunning <a href="https://cms.blockworks.co/cryptocurrency-luna-lurches-as-terra-usd-volatility-continues-erasing-billions/" target="_blank" rel="noreferrer noopener">collapse</a> of Terraform Labs’ stablecoin TerraUSD (UST) in May, which wiped out more than $200 billion in the space, NEAR’s native-stable coin was made to transition to a non-algorithmic version backed by Tether (USDT) tokens, owing to potential risks.



Since USN was originally an algorithmic stablecoin, it became prone to undercollateralization during extreme market conditions, according to Decentral Bank. A separate double-minting issue also contributed to the undercollateralization, meaning there wasn’t sufficient collateral to back the token.



<h3 class="wp-block-heading">NEAR to use $40 million to protect investors affected by USN shutdown</h3>



The NEAR Foundation pegged the known collateral gap at $40 million, saying the imbalance “cannot expand further assuming DCB burns/destroys all the double-minted USN and promptly winds down the project in an orderly manner.”



It clarified that the gap is not associated with its native token NEAR, which provides utility within the protocol, and set aside $40 million in fiat currency to fund a “USN Protection Programme.”



<h3 class="wp-block-heading">Rough times for algorithmic stablecoins</h3>



Most stablecoins are backed by an asset like fiat currency or physical assets like gold. But algorithmic stablecoins aren’t backed by external assets, rather they rely on specific instructions to help the coin maintain its peg. Similarly, UST was not backed by the US dollar, instead using financial engineering with sister token LUNA to maintain its links to the dollar.



Jamie Thomson, CEO of NFT gaming studio Vulcan Forged, pointed out the disadvantages of algorithmic stablecoins: the lack of real asset backing means price stability isn’t guaranteed.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“People were skeptical of algorithmic stablecoins after TerraUSD crashed, but now that NEAR protocol has closed its stablecoin, they have more evidence,” he told Blockworks via email.&nbsp;</blockquote>



“Where there are market movements traders could get profits, but it’s clear it will be now even harder for projects to maintain long-term interest in their algorithmic stablecoins,” Thomson added.



Although the NEAR Foundation believes its collateral gap can be contained, concerns over the future of stablecoins remain.&nbsp;



NEAR Foundation didn’t return Blockworks’ request for comment by press time.



Even one sign of weakness or a systemic issue is enough for a large-scale loss of trust, according to Simon Schaber, the chief business development officer at Spool.



Despite concerns over their critical characteristics, <a href="https://cms.blockworks.co/?s=beanstalk" target="_blank" rel="noreferrer noopener">Beanstalk</a> is among the algorithmic stablecoins still standing. The Ethereum-based stablecoin protocol suffered a $180 million exploit in April, but <a href="https://cms.blockworks.co/algo-stablecoin-protocol-beanstalk-relaunches-following-180m-hack/" target="_blank" rel="noreferrer noopener">resumed services</a> four months later. 



&#8220;Beanstalk uses a different mechanism than USN to create price stability. Bean, the stablecoin issued by Beanstalk, is backed by credit rather than any form of collateral,&#8221; a spokesperson told Blockworks.



This report was updated on Oct. 26 at 8:33 am ET to include Beanstalk&#8217;s comment.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

NEAR Nixes Algorithmic Stablecoin USN

Jack Kubinec

<div id="highlights-block_63357f673fcc0" class="highlights">
 <ul>
 <li>Tether, Circle, and Binance still make up 90% of stablecoins</li>
 <li>“The future is an uncollateralized stablecoin,” a decentralized stablecoin founder said</li>
 </ul>
 
</div>



Stablecoin issuers have gotten pretty good at explaining what differentiates their token from Terra’s failed experiment in recent months, as they seek to fill Terra&#8217;s void while avoiding its reputation.&nbsp;



After the algorithmic stablecoin lost its dollar peg and death spiraled $30 billion in a matter of days, <a href="https://cms.blockworks.co/terra-collapse-could-spell-end-for-algorithmic-stablecoins/" target="_blank" rel="noreferrer noopener">Terra</a> set off the crypto crash that took down giant centralized crypto firms Voyager, Celsius, and hedge fund Three Arrows Capital earlier this year.&nbsp;



Non-volatile tokens are crucial for crypto adoption, and a bevy of stablecoin projects are attempting to attain Terra-like levels of support while simultaneously trying to distance themselves from Terra comparisons.



Stablecoins create a pretty compelling case for investors: attain the stability of fiat currencies with the advantages of programmable money crypto provides.&nbsp;



But after Terra collapsed, “there’s more skepticism” being shown toward stablecoins, Sam Kazemian, founder of the decentralized Frax stablecoin, told Blockworks.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“It’s unfortunate it had to happen after the whole Terra situation, but there&#8217;s got to be a little bit more discipline” on the part of stablecoin issuers, Kazemian said.</blockquote>



After a period of rapid adoption from 2019-2021, stablecoins have become a crypto staple. Three of the top seven cryptocurrencies <a href="https://coinmarketcap.com/all/views/all/">by market cap</a> are stables: Tether (USDT), US Dollar Coin (USDC), and Binance USD (BUSD). The market is top-heavy, though — the three leading stablecoins make up 90% of the total stablecoin market cap, <a href="https://defillama.com/stablecoins">per DeFiLlama</a>.



The three major stablecoins are collateralized, meaning fiat assets are custodied for every stablecoin in circulation, and centralized, meaning they are managed off-chain by private companies.



<h3 class="wp-block-heading">The return of the algos&nbsp;</h3>



There is little appetite among policymakers to indulge the fancy economic experiments of some algorithmic or crypto-collateralized stablecoins. According to a draft US House of Representatives bill, Congress is even considering legislating a 2-year moratorium on, what the draft terms, “endogenously collateralized stablecoins,” <a href="https://www.bloomberg.com/news/articles/2022-09-20/house-stablecoin-bill-would-put-two-year-ban-on-terra-like-coins" target="_blank" rel="noreferrer noopener">Bloomberg reported</a>.



Only those fully backed with collateral overseen by regulators — like Circle’s USDC — need apply. Although, this approach is still far from becoming law.



Publius, the pseudonymous founder of stablecoin issuer <a href="https://cms.blockworks.co/hacked-stablecoin-beanstalk-raises-9m-for-market-protocol/" target="_blank" rel="noreferrer noopener">Beanstalk</a>, thinks the stablecoin giants will hit a ceiling where it becomes unprofitable to fully back the tokens.



Therefore, uncollateralized stablecoins with novel spins on the Terra’s algorithmic ilk may yet become necessary for growth as DeFi leaves finance’s fringe, he said.



“It&#8217;s really hard to lock up a trillion dollars or more of collateral,” Publius said.



Though, with 2-year US Treasury bond yields <a href="https://ycharts.com/indicators/2_year_treasury_rate" target="_blank" rel="noreferrer noopener">above 4%</a>, the Circle cash stash looks like quite an asset.



In a testament to Terra’s continued pariahdom, the term “algorithmic” has disappeared from the stablecoin space, with Near, Shiba Inu, and Thorchain <a href="https://twitter.com/DefiIgnas/status/1559857962457628672" target="_blank" rel="noreferrer noopener">all sunsetting or renaming</a> their algorithmic stables.&nbsp;



But it’s more efficient not to overcollateralize stablecoins with deadweight dollars, and emerging stablecoins — like DeFi lending platforms <a href="https://cms.blockworks.co/aave-dao-approves-crypto-backed-stablecoin-gho/" target="_blank" rel="noreferrer noopener">Aave</a> and <a href="https://www.coindesk.com/tech/2022/09/07/defi-platform-curve-finance-takes-first-steps-toward-crvusd-stablecoin/" target="_blank" rel="noreferrer noopener">Curve</a>’s forthcoming offerings — tend to not fully back their tokens in the same way as their fully-collateralized peers.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“The future is an uncollateralized stablecoin,” Publius said.</blockquote>



“It’s still the fiat coin era [while users onboard to crypto]” Kazemian said. “The long game” involves “stablecoins that are decentralized, on-chain, and pegged to a basket of consumer items [rather than a fiat currency].”



However, given the political realities in both the US Congress and <a href="https://cms.blockworks.co/eu-crypto-lobby-fights-mica-limits-on-us-dollar-stablecoins/" target="_blank" rel="noreferrer noopener">the EU</a>, novel stablecoins may find it difficult to gain adoption.



Additional reporting by Macauley Peterson.

Playing the ‘We’re Not Terra’ Stablecoin Game

Sebastian Sinclair

<div id="highlights-block_62f0aa2017655" class="highlights">
 <ul>
 <li>Beanstalk said it has relaunced its protocol during its one year anniversary on the Ethereum mainnet</li>
 <li>It follows a $180 million governance exploit where a hacker managed to steal 24,830 ether and 36 million BEAN tokens</li>
 </ul>
 
</div>



Algorithmic stablecoin protocol Beanstalk said Friday it has resumed its services nearly four months after it was hacked for $180 million in crypto.



Beanstalk Farms, the self-styled “decentralized credit-based stablecoin protocol,” said it has &#8220;unpaused&#8221; its services concurrent with the one-year anniversary of its debut on the Ethereum mainnet on Aug. 6, 2021.



The protocol developers are hoping its revamped launch will help buoy issues pertaining to its security and trust following a <a href="https://cms.blockworks.co/algo-stablecoin-protocol-beanstalk-cut-down-by-governance-hijack/" target="_blank" rel="noreferrer noopener">major hack</a> on April 17.



&#8220;It’s impossible to predict how it will perform, but Beanstalk Farms’ belief in the possibilities for a permissionless fiat stablecoin is unwavering,&#8221; the group wrote <a href="https://bean.money/blog/beanstalk-one-year-anniversary" target="_blank" rel="noreferrer noopener">in a blog post</a>.



The major hack involving a <a href="https://cms.blockworks.co/algo-stablecoin-protocol-beanstalk-cut-down-by-governance-hijack/" target="_blank" rel="noreferrer noopener">governance flash loan exploit</a> saw an attacker drain 24,830 ether and 36 million BEAN tokens, worth about $180 million at the time. The protocol&#8217;s hack currently ranks as the industry&#8217;s sixth largest exploit, according to the industry tracking website <a href="https://rekt.news/leaderboard/" target="_blank" rel="noreferrer noopener">Rekt Leaderboard</a>.



&#8220;Since then, Beanstalk Farms and Bean Sprout have worked with the Beanstalk community to prepare the protocol for a safe replant and unpause,&#8221; per the post.



&#8220;The unpause was successful and Beanstalk is at peg,&#8221; a spokesperson told Blockworks via email. &#8220;During the first 24 hours of the unpause, Beanstalk was top 10 within the most activity on the Ethereum blockchain.&#8221;



Beanstalk&nbsp;is a permissionless fiat stablecoin protocol designed to utilize credit instead of collateral to issue its native stablecoin (BEAN), according to its <a href="https://docs.bean.money/" target="_blank" rel="noreferrer noopener">website</a>. 



The protocol claims its primary objective is to &#8220;incentivize independent market participants&#8221; to cross the price of 1 BEAN over its dollar peg in a &#8220;sustainable fashion.&#8221; Algorithmic stablecoins have been called into question following the <a href="https://cms.blockworks.co/tag/terra/" target="_blank" rel="noreferrer noopener">collapse of Terra&#8217;s ecosystem</a> in May.



The team behind Beanstalk <a href="https://cms.blockworks.co/hacked-stablecoin-beanstalk-raises-9m-for-market-protocol/" target="_blank" rel="noreferrer noopener">recently announced</a> a $9 million fundraise for a new protocol dubbed Root.



Updated on August 9, 2022, at 1:53 am ET: Adds commentary from Beanstalk spokesperson



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

Algo Stablecoin Protocol Beanstalk Relaunches Following $180M Hack

<div id="highlights-block_62e18fd4ad7dc" class="highlights">
 <ul>
 <li>A “significant portion” of the seed funding went to support a Beanstalk recapitalization token to pay back investors affected by the hack</li>
 <li>Root has been in talks with Polygon about using its zkEVM to validate transactions</li>
 </ul>
 
</div>



Beanstalk, the Ethereum-native stablecoin <a href="https://cms.blockworks.co/algo-stablecoin-protocol-beanstalk-cut-down-by-governance-hijack/" target="_blank" rel="noreferrer noopener">hacked for $180 million in April</a>, has yet to resume operations as it struggles to recapitalize. But investors seem to have let bygones be bygones — Beanstalk-built market protocol Root received $9 million in seed funding to develop a zero-fee decentralized marketplace.



Announced Tuesday, the funding round was led by Road Capital, Nima Capital, Soma Capital and Manifest Crypto.



Beanstalk suffered <a href="https://cms.blockworks.co/the-nine-largest-crypto-hacks-in-2022/" target="_blank" rel="noreferrer noopener">one of the year’s largest crypto hacks</a> when a so-called flash loan temporarily gave a malicious user enough funds to control the protocol’s governance. The protocol has since plugged the governance loophole with multi-signature security, where five of nine validators chosen by Beanstalk developers must validate governance decisions.



Prior to this funding round, Beanstalk frequently highlighted that its growth to $100 million in market cap happened without venture capital funding.&nbsp;



Parth Patel, founding member of Root Labs, emphasized the funding round was for Root, not for Beanstalk, though the development teams are intertwined.



“The opportunities to invest in Beanstalk are equitable for all,” Patel told Blockworks, adding the funding round was meant “to help provide liquidity on the markets we make on top of Beanstalk.”



Root’s fundraise comes weeks before Beanstalk’s “Replanting,” when the protocol will reopen after being paused since April. In the interim, Beanstalk has been running a “Barn Raise” recapitalization campaign, selling Fertilizer tokens that accrue interest based on Bean token mints.&nbsp;



The Barn Raise will continue until all compromised investors are repaid, though only 15% of the $77 million hole has been filled so far, according to Patel.



Root said it spent a “significant portion” of its seed funding on Fertilizer, and it hopes to use the Bean yield to fund its treasury.



Root will initially only host a Fertilizer secondary market and Beanstalk interest rate swap market, though the developers hope to create markets for asset futures, non-fungible tokens (NFTs), and sports and political election betting.



Root hopes to attract users by allowing market participants to transact without fees. Patel said Root has been in talks with Polygon about using its forthcoming zkEVM to validate transactions. In a best-case scenario, a partnership with the <a href="https://cms.blockworks.co/polygon-unveils-zkevm-the-holy-grail-of-scaling/" target="_blank" rel="noreferrer noopener">scaling “holy grail</a>” could significantly lower Root’s costs.



Root will make transactions free for users by either subsidizing the market itself or asking the Beanstalk DAO to foot the bill, Patel said.



The Root Protocol aims to go live by the end of the year. Beanstalk re-launches on Aug. 6.



Publius, the developer group behind the stablecoin, was circumspect about the ecosystem’s prospects in a June blog post.



“The thing about a system like Beanstalk is that it works until it doesn’t. You can never actually know if it works, only that it has worked so far,” Publius wrote.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

Team Behind Hacked Beanstalk Stablecoin Raises $9M for Market Protocol

Macauley Peterson

<div id="highlights-block_625d93ec94215" class="highlights">
 <ul>
 <li>An attacker drained 24,830 ether and 36 million BEAN tokens worth about $180 million</li>
 <li>The attacker exploited a loophole in the protocol&#8217;s governance process to push through a malicious “improvement proposal”</li>
 </ul>
 
</div>



Beanstalk Farms, billed as “a decentralized credit based stablecoin protocol,” was exploited on Sunday for paper losses of about $180 million — the year’s latest DeFi hack.



That pegs it as the fifth-largest protocol exploit on the tracking site <a href="https://rekt.news/leaderboard/" target="_blank" rel="noreferrer noopener">Rekt Leaderboard</a> and the second largest this year after the massive <a href="https://cms.blockworks.co/axie-infinity-developers-made-some-trade-offs-that-enabled-625m-ronin-breach/" target="_blank" rel="noreferrer noopener">Ronin Bridge hack</a> in March. Security firm PeckShield <a href="https://twitter.com/peckshield/status/1515680335769456640" target="_blank" rel="noreferrer noopener">first reported</a> the news.



Like the Ronin exploit, most of the stolen funds consist of ether, which the attacker quickly began funneling into privacy protocol <a href="https://cms.blockworks.co/the-purpose-and-perils-of-crypto-privacy-tools/" target="_blank" rel="noreferrer noopener">Tornado Cash</a> in an effort to obscure the tokens&#8217; origin.



The group confirmed the exploit <a href="https://twitter.com/BeanstalkFarms/status/1515700678454390785?s=20&amp;t=6bBnLvTLeFj_ldavvVEpfw" target="_blank" rel="noreferrer noopener">on Twitter</a> Sunday and is now <a href="https://twitter.com/BeanstalkFarms/status/1515747114894065664?s=20&amp;t=6bBnLvTLeFj_ldavvVEpfw" target="_blank" rel="noreferrer noopener">considering</a> a path forward.



Beanstalk had recently celebrated a milestone, reaching $100 million in BEAN tokens minted. One BEAN was meant to be equal to one US dollar, but unlike stablecoins backed by fiat or crypto collateral, Beanstalk used a novel system of financial incentives to maintain its peg using credit rather than overcollateralization, according to its <a href="https://bean.money/docs/beanstalk.pdf" target="_blank" rel="noreferrer noopener">whitepaper</a>.



The protocol had undergone one audit from blockchain security expert Omniscia, but the firm indicated in a <a href="https://medium.com/@omniscia.io/beanstalk-farms-post-mortem-analysis-a0667ee0ca9d" target="_blank" rel="noreferrer noopener">post-mortem analysis</a> that the production code which suffered the exploit differed from what the firm had audited.



The developers disputed that account during a live <a href="https://anchor.fm/beanstalk-farms/episodes/Beanstalk-Exploit-Town-Hall---041722-e1hah60" target="_blank" rel="noreferrer noopener">town hall meeting</a> Sunday.



“We’re not in the business of pointing fingers [but] we did take a look at the report they published and didn’t feel that it was a genuine account of what occurred,” the lead developer said.



Omniscia pointed to a “flash-loan susceptible governance flaw” as the culprit, allowing the attacker to propose and then force through a malicious governance proposal that effectively withdrew all the protocol’s assets to the attacker’s wallet.



The trick was to use a massive flash-loan — borrowing vast sums that must be repaid within the same transaction — and circumvent the usual life cycle of a governance proposal. In a bit of DeFi magic using $1.04 billion in borrowed stablecoins, the attacker briefly acquired a supermajority of the protocol’s voting power, which was directed to immediately execute malicious code.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“The Beanstalk Protocol supported protocol upgrades via its Beanstalk-Improvement-Proposal (BIP) governance mechanism and as such, it was possible for an upgrade to perform arbitrary code execution thus allowing the attacker to retrieve their locked funds as part of their malicious update,” Omniscia wrote.</blockquote>



A 24-hour waiting period was in effect, but the offending BIP was disguised as a bid to donate funds to support Ukraine and passed the delay period before a supermajority vote would be effective.



“We thought it was very strange, but we obviously were not aware of what was going on, what attack was in progress,” the developers explained during the town hall.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“We’re going to do everything we can to find out who did this and bring them to justice.”</blockquote>



Following the exploit, the protocol‘s BEAN tokens immediately dropped in value by 90% and effectively all its other assets, including those deployed by the attacker, were liquidated, resulting in a net profit of about $75 million in ether and other tokens.



<div class="wp-block-image"><figure class="aligncenter"><img decoding="async" src="https://lh3.googleusercontent.com/IC5hTLOpqEPk574b_XTJLDGu-geLQH_8TYAV4l_mGJtjX9wAYm6stnlNCvL7TZx34Qcv8BsUeODOHE4wN-Ntqy192VgWq8PgXjrFfaZcfE3X7DsjyX9n7nVVJ-ROm5Zk96epLkEY" alt=""/><figcaption>According to Beanstalk&#8217;s developers, &#8220;the existing [BEAN] should not be bought or traded as >33% of Beans are still in the exploiter&#8217;s custody. Given that the Bean token is not upgradable and has no blacklist capabilities, there is no way to remove these Beans from the exploiter&#8217;s custody. Thus, a new Bean ERC-20 token will need to be issued during a restart.&#8221;</figcaption></figure></div>



According to PeckShield, the hacker sent $250,000 of USDC to an address in support of Ukraine. 



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">4/ The initial funds to launch the hack are withdrawn from <a href="https://twitter.com/SynapseProtocol?ref_src=twsrc%5Etfw">@SynapseProtocol</a> and most of the result gains are deposited to <a href="https://twitter.com/TornadoCash?ref_src=twsrc%5Etfw">@TornadoCash</a>. Currently 15,154 ETH still stays in the hacker’s account. Note the hacker donates 250k USDC to Ukraine Crypto Donation. <a href="https://t.co/jBjUJ0JbGj">pic.twitter.com/jBjUJ0JbGj</a>&mdash; PeckShield Inc. (@peckshield) <a href="https://twitter.com/peckshield/status/1515693348815790081?ref_src=twsrc%5Etfw">April 17, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<h3 class="wp-block-heading">Seeds of hope</h3>



Despite the catastrophe, the protocol’s developers have pledged to continue work on the project.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Today is a bad day, but it is not the end. We have been blown away by the show of the support from our community this am. The path forward is unclear, but the destination has never been clearer.&mdash; publius (@isthispublius) <a href="https://twitter.com/isthispublius/status/1515728000247123971?ref_src=twsrc%5Etfw">April 17, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



During the town hall and on <a href="https://discord.gg/beanstalk" target="_blank" rel="noreferrer noopener">the group’s Discord</a>, the pseudonymous team took the extraordinary step of revealing their identities and explained their intention to cooperate with law enforcement in the hope of identifying the attacker and recovering funds.



<div class="wp-block-image"><figure class="aligncenter"><img decoding="async" src="https://lh5.googleusercontent.com/_x64Yh0o5hCr1ejvZ4riFBU9v2HabC8-scfHnu4gxd10EbaJTil4UmKGDfLPVEb6gP3sJRx_1X5pwjPY0Xa1SmVB9YJfBgCAd9CGj5CfW4x0o4hzjyysefYLuCbtcHYUHk1rYnzu" alt=""/></figure></div>



This is not the first time flash-loans have been deployed in a DeFi exploit. Last year, <a href="https://cms.blockworks.co/flash-loan-exploit-whips-cream-finance-for-130-million/" target="_blank" rel="noreferrer noopener">Cream Finance was robbed</a> of $130 million. That led its governance token CREAM to plummet by 70% — from which it has never recovered.



Unlike other high-value hacks, such as the <a href="https://cms.blockworks.co/wormhole-parent-commits-320m-ether-to-replace-massive-defi-hack-losses/" target="_blank" rel="noreferrer noopener">Solana Wormhole bridge exploit</a>, Beanstalk has no venture capital backing that could potentially provide a bailout to recapitalize the system.



The Beanstalk team did not immediately return a request for comment Monday.



In a follow-up <a href="https://bean.money/blog/beanstalk-governance-exploit" target="_blank" rel="noreferrer noopener">blog post</a> on Tuesday, the Beanstalk Farms team identified four &#8220;primary goals&#8221; for the project: &#8220;securing the enduring success of Beanstalk&#8217;s economic model; attracting sufficient capital to restart Beanstalk; preserving as much of each Farmers&#8217; Stalk, Seed and Pod positions as possible, and; aligning new capital with previous Stalk and Pod holders.&#8221;



This story was updated on April 19 and 5:00 am ET.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.