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- FTX CEO took the DeFi community to task for putting too much trust in oracles
- Hacker stole $100 million worth of funds on Tuesday
- The hacker used a flaw in Mango Market’s design
On Wednesday, FTX CEO Sam Bankman-Fried discussed the lessons learned from Tuesday’s Mango Markets hack on Twitter. DeFi oracles were also in his sights.
He stated that you just have to make up your own damn mind when it comes to oracles.
Oracles convert real-world data that is off-chain into data that can be used on a blockchain.
MNGO Price at the time of writing – $0.02291
Oracles open smart contracts, which are programs that run when a certain condition is met. These contracts can be used for a variety of things, like investing and trading digital assets, forecasting markets, and even carbon taxes.
On Tuesday, the Mango Markets Solana Defi trading platform was hacked and $100 million in funds were taken.
The attacker was able to negotiate a $100 million loan based on the information provided by the platform’s oracle after exploiting a design flaw in Mango Market to appear to have more collateral than they actually did.
This led to an increase in the price of the MNGO token. He stated that the oracle accurately reported the current MNGO price. Simply put, the current price was not even remotely comparable to the fair price.
He explained that this is because significant positions, particularly in tokens that are not liquid, can have a significant impact. The risk engine, which is software that provides measurements for market risks and analysis of investments, forces some positions, such as MNGO, to be fully collateralized.
The oracle tells you everything and nothing
Full collateralization means that the borrower provides collateral throughout the loan. The cryptocurrency was used as collateral in this instance.
Mango Markets demanded a maintenance collateral ratio of 110 percent and an initial collateral ratio of 120 percent. If the user’s collateral ratio falls below 110%, the account will be closed.
He stated that the risk engine ensures that the collateral backing a position is sufficient even before hitting position limits. An exploit was used by the Mango Market attacker to appear to have sufficient collateral.
ALSO READ: Efficiency updates to FTX announced by Sam Bankman-Fried
What is special about mango?
Low latency, low transaction costs, and complete decentralization are essential components of this vision. Since they are finally available on Solana, they believe that all three components are necessary for the project to be viable.
In the end, Mango wants to win the financial services industry over the long term. Their tools are usable due to their low latency. Mango’s low prices make it hard to compete.
Mango is difficult to kill through centralized evil or incompetence because of decentralization. The best people will be drawn to build and run the protocol through open governance that distributes wealth and power liberally to builders.
Last but not least, the permissionless nature will make it possible for millions of minute experiments to produce innovations that alter lives.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
