There are no dull days in decentralized finance, but today's news is like a cryptocurrency ring on Seinfeld.
On Tuesday, a hacker stole around $112 million from Mango Market, hosted on the Solana crypto platform. They did this by buying large amounts of MNGO tokens in two separate accounts and selling them (betting that the price would go up) in the other account. They then used the extra money to control the price of MQT and pile the money into the long account, effectively depleting the liquidity in the Mango markets.
Officially, Mango Markets said that the incident "completely depleted the available capital" and that their priorities were "to ensure the recovery of Mango Protocol depositors" as well as "trying to create some value in Mango". To rebuild the DAO and protocol from here to avoid further losses.
While absolutely terrifying for investors left empty-handed in the mango market, this type of success is repeated many times and often nets hackers hundreds of millions of dollars. In other words, it won't really be strange in crypto countries.
But this time, it looks like the hacker has decided to go Robin Hood style by using the arrangement of mango markets to keep some cash for himself.
Mango Markets is a DAO or Decentralized Independent Organization. This means that there could be a vote where NGO token holders can vote on the future of the entire project. The more MNGO tokens you have, the more voting power you have.
Like many decentralized finance projects recently, Mango Markets had a lot of bad debt stemming from the June cycle when Mango Markets and another DiFi venture, Soland, acquired the largest whale, Solan. From the collapse of the entire ecosystem (in crypto parlance, a whale is a person with a large amount of crypto).
The hacker used this configuration to provide it to the Mango community. Mango Markets said it would return some of the money if it used the money in the reserve to pay off bad debts and pay its customers. They also demanded that the hacker not be prosecuted and their tokens banned. The hacker then used the MNGO tokens to vote yes on the proposal, achieving a 99.9% approval rating.
Yes, decentralized finance is a strange place.
To summarize: someone stole a lot of MNGO tokens from Mango Markets. They then offered to return some of the signs, but only if Mango Markets didn't send the police after them. They then voted yes on their proposal to use the looted MNGO symbols.
Unfortunately for the hacker, the offer was not at an acceptable level and he was unable to immediately approve the requests.
However, this is another indication that DAOs still have a lot of work to do – not only to prevent hackers from stealing their funds, but also to use DAO governance mechanisms to bend projects to their will.