Author: Fu He Huo, Odaily Planet Daily
Today, another large theft occurred in the crypto world. The security platform Scam Sniffer posted on the X platform that someone lost 15,079 fwDETH, worth about $35 million, after signing the "permit" phishing signature. The hacker then sold the stolen funds on the market and exchanged DETH for ETH through swap transactions. Due to the insufficient depth of the DETH pool, 14,079 DETH were only exchanged for 2,288 ETH, but it still caused DETH to depeg. CoinGecko data shows that DETH once fell to 91.58 USDT, a drop of more than 90%. It has now rebounded to 1135 USDT, but it has not yet gotten rid of the depegging state.
According to Lookonchain monitoring, the address that lost $36 million worth of fwDETH due to a phishing attack is suspected to be related to Continue Capital.
Only one hour later, Continue Capital co-founder Lin Xiahong posted on the X platform: "I accidentally revealed that I had not retired from the entertainment industry, and my charity work was passively on the headlines." In addition, Lin Xiahong posted on WeChat Moments to disclose the details of the theft, "Recently, my Gmail has been frequently hacked, and fake dialog boxes often pop up. Although I refused, it seems that I can't stop it. What's worse is that the hacker called pretending to be Google customer service, claiming that someone was trying to access my account and asked to confirm his identity."
According to Lin Xiahong, it is not clear how the money was stolen, but it can be seen that the methods of online fraud are becoming more and more sophisticated.
It is reported that this phishing attack was carried out by hackers using Permit signatures. Contracts that support Permit can be authorized through Permit offline signatures, skipping Approve and without paying gas. After authorization, the third party has the corresponding control and can transfer the user's authorized assets at any time.
Later, Duo Exchange officially responded, "We have noticed the recent phishing attacks against some whales on Duo. More than 10,000 DETH were sold on AMM, causing the DETH price to decouple. DETH is designed to always be redeemable for "opened" ETH on Duo at a 1:1 ratio. The Duo protocol itself is secure and still operates as expected. We are closely monitoring developments and working with affected parties."
The overall process of this theft is as above, but what really concerns the community is whether it is possible to buy DETH at the bottom. For this reason, Odaily Planet Daily collects the key points of Duo Exchange official documents and social media discussions, and then explores the chances and risks of buying at the bottom.
Is the de-anchoring opportunity a bargain hunting opportunity? But bargain hunting is also fraught with fear
After most thefts lead to the depegging of a stablecoin or wrapped token, some investors in the market will use the method of bottom-fishing arbitrage to obtain short-term gains, such as Luna in the past and VUSD recently. After the depegging of DETH this time, although some users still participated in bottom-fishing, the trend of discussion on social media made bottom-fishers tremble with fear.
The main reason is that according to the official documentation of Duo Exchange, the protocol manager controls the final emergency switch. In an emergency, LP 1 and LP 2 can withdraw their principal directly from the contract without interacting with the vault contract.
In simple terms, when problems arise with the protocol, the authorities can use the "backdoor" to withdraw the ETH principal previously deposited by users, thereby avoiding risks. This view caused panic in the market, causing some bottom-fishing users to regret their bottom-fishing behavior.
But fundamentally, this time a large account was stolen, but the protocol continued to operate normally, which does not meet the emergency conditions mentioned above.
Moreover, the official reply emphasized: "DETH is designed to always be exchangeable for 'opened' ETH at a 1:1 ratio on Duo." According to the official repost of @OxAerlion, "At the current exchange rate of 1 ETH to 2D ETH, market buyers of DETH will not suffer losses in the next few days or weeks." This may also hint at the possibility of bottom-fishing for profit.
Below we have also sorted out the pros and cons of DETH bottom fishing based on the protocol documents and community comments for your reference.
Advantages:
Potential arbitrage opportunities: The current exchange ratio of DETH to ETH is 2:1, which is significantly lower than its historical average, which provides arbitrage opportunities for bargain hunters. There is a view in the market that as the market gradually recovers, investors may obtain immediate returns of up to 40%. This means that if market conditions improve, bargain hunters can realize profits at lower costs.
1: 1 backed security: DETH is 1: 1 backed by ETH on Duo Exchange. This shows that as long as the protocol itself is secure, the DETH held by bargain hunters still has value. The current unpegging situation has nothing to do with the redemption mechanism of the protocol, but is due to the security issues of a third party. Therefore, in theory, the long-term value of DETH is still supported.
Market demand and liquidity: Bottom-pickers can drive up demand and increase liquidity by buying DETH through the market. As more investors want to redeem their DETH, the liquidity of the market may increase, pushing up the price. In addition, bottom-pickers may find other users in the market who are willing to buy their DETH at a discount.
Disadvantages:
Hacker risk and market uncertainty: The recent hacker attack directly caused the DETH price to plummet, exposing bargain hunters to additional risks. Although there are arbitrage opportunities, if the project chooses to take snapshots and repay the losses of large investors, the $DETH held by bargain hunters may depreciate rapidly, causing losses.
Redemption restrictions and liquidity issues: According to the agreement, users who have not deposited ETH on DUO cannot redeem DETH at a 1:1 ratio. This means that bargain hunters are restricted when redeeming and need to rely on other investors who already hold positions to trade. This redemption restriction increases liquidity and trading difficulty, and bargain hunters may face longer waiting times during the market recovery process.
Bad debt risk and market pressure: Lending protocols such as Orbit Lending may face a large amount of bad debt, which puts pressure on market recovery. Because these protocols have been exploited by arbitrageurs, market liquidity and confidence have been affected, which may lead to further depreciation of DETH.
Psychological factors and market sentiment: In the current situation of low market sentiment, investors’ confidence in DETH may be affected. If the market is generally pessimistic, bargain hunters may face difficulties in cashing out even if they hold DETH.
