10 audits, 0 issues... and a $196 million hack?

GM Guys and Gals,

Remember the story of the Emperor's New Clothes? Well, we have a new version for you today: The Lender's New Audits.

Euler Finance, an Ethereum-based lending protocol, was hacked for $196 million despite passing not one, not two, but TEN separate audits over the course of TWO years. Yes, you read that right. Ten audits in two years. That's like getting a health check-up every week and still getting sick.

The audits, conducted by six different firms, deemed Euler Finance "nothing higher than low risk" and "had no outstanding issues." But apparently, the hackers didn't get the memo.

Euler Labs CEO Michael Bentley took to Twitter to describe the "hardest days" of his life, saying the platform "has always been a security-minded project." Well, apparently not security-minded enough, Michael.

The audits were conducted by some big names in the blockchain security world, including Halborn, Solidified, ZK Labs, Certora, Sherlock, and Omnisica. Halborn even went as far as to say that Euler received "nothing higher than low risk."

Well, maybe they should have aimed for something higher than low risk, like...high risk? At least then it would have been a more accurate reflection of reality.

In December 2022, Halborn found "an overall satisfactory result" after inspecting and analyzing 23 smart contracts over a one-month period. Only "two low risks and three informational" risks were identified. And apparently, Euler stated that the risks "pose no significant threats." Famous last words, am I right?

The protocol's hacker began moving funds through crypto mixer Tornado Cash only hours after Euler issued a $1 million bounty for information leading to the hacker's arrest. Talk about a bold move.

Bentley said he'd never forgive the attacker, as he was forced to sacrifice time with his newborn son due to the attack. But at least he's thanking the security experts who are "working on leads" for the investigation.

Let this be a lesson, folks. Ten audits may not be enough to keep the hackers away. Maybe aim for eleven next time?

As the crypto world continues to evolve, we will keep you updated on all the latest developments. Stay tuned for more updates from Web3shala.

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That’s it for the day, Web3Shala 👋

To the Moon 🚀