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13 August 2021: The recent hack of PolyNetwork has made headlines in nearly every facet of cryptocurrency journalism, citing the record breaking theft of over $600 million USD in assets. Since then, much of the stolen capital has actually been returned by this "good guy" hacker after the network simply asked nicely. This article will explore the details of the PolyNetwork hack and why, as the largest hack ever in the history of decentralized finance, has some people calling it strange.
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The Theft & Return of Nearly $1 Billion USD
The PolyNetwork is "built to implement interoperability between multiple chains in order to build the next generation internet infrastructure" per the description they offer of their services via their website. Through authorized connections through the PolyNetwork, blockchains gain interoperability, establishing communication and transferability between differing blockchains. In other words, PolyNetwork, like similar cross-chain projects, is attempting to establish an internet of blockchains.
The heist of over $600 million USD in crypto assets occurred just a few days ago, on the 10th of August. The announcement of the hack sent waves throughout the cryptocurrency community, prompting many to dig for deeper details, speculate on the impact towards markets, and infer what such a record breaking hack could mean for the future of DeFi. After the hack occurred, the PolyNetwork tweeted out the following:
The amazing part about this is that it worked. After acknowledging the details of the hack and making public the known address in which the stolen funds were transferred, a few days later the funds were slowly returned. The interesting part of this whole event is that the funds were returned with attached messages encoded onto the Ethereum blockchain. Dubbed the name Mr. White Hat, the hacker has slowly but surely returned nearly all of the missing $600 million in funds.
So, what was the motivation for the hacker initiating the single largest DeFi / Crypto hack in history? Well, the answers potentially lie in the hacker's messages on the blockchain. Per Tom Robinson on Twitter (@tomrobin), a thread of the hacker's comments have been posted, demonstrating a possible look into why the hack was carried out. The first of these messages is available below:
The hacker, based on their comments, appear to have carried out the attack to "expose the vulnerability" within the PolyNetwork and to "beat any insiders or hackers" which, if the hacker is not an insider of the network, effectively completed. The entire thread is available here.
Summary
The exact motivations and who this Mr. White Hat truly are may never be known for sure. However, this hacker did expose a major flaw in an otherwise highly sophisticated network. By exposing the flaw and subsequently returning all the assets that were initially stolen (except for some frozen USDT), the hacker arguably did all of DeFi a service by demonstrating potential vulnerabilities in cross-chain / interoperable blockchain systems.
Due to the timely returning of the stolen funds, it is not outlandish to say that the hacker was not a malicious entity. Whether the hacker was indeed an insider or something else remains in the air and up to speculation. The largest hack in DeFi history appears to have been resolved much faster than anyone within the cryptocurrency community could have imagined.
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