Hedging Your Bets Can Hurt Your Bank Account
We all know that when it comes to gambling, you’re supposed to hedge your bets, but boy did the Hedera team learn that lesson the hard way! Recently, the founders of Hedera hashed out their plans for some seriously ambitious liquidity pool experiments—and it seems that those ambitious plans ended with some less-than-desirable outcomes.
Apparently, the team recently revealed an exploitable bug in the mainnet that led to the loss of a grand total of $100 million worth of liquidity pool tokens. Talk about an unlucky ending to a risky gamble!
So What Happened Exactly?
It seems that the team had been working on building a “marketplace” of sorts where developers, investors, and wallet holders could trade and exchange tokens in an efficient manner, and weren’t too concerned when they found the bug, as they felt they could focus more on enhancing the product rather than patching it up.
Little did they know that someone had tipped off a hacker about this bug, who went ahead and exploited it in order to pilfer the tokens from the liquidity pools.
A Sour Ending To An Otherwise Sweet Opportunity
It’s too bad, really, as the co-founder of Hedera seemed really excited about what the marketplace could have been. They had hoped to see it become a hub of sorts for various developers to come together to trade tokens without having to worry about compliance or other such regulatory things.
Alas, however, those dreams were crushed when it became clear that someone had taken advantage of the bug and taken away the tokens.
How To Avoid A Similar Fate
It should go without saying that if you’re experimenting with something new, you should definitely be keeping a close eye on potential exploitable bugs. At the end of the day, it’s better to be safe than sorry–especially if the potential damages include the loss of millions of dollars.
It’s also a good idea to take a look at the prospective risks and issues that come with the territory, and best practices for dealing with them. Here are a few things to consider when playing around with something like a liquidity pool:
- Analyze the security risks. Before launching, understand what could potentially go wrong, such as irregular transactions and holes in the code, and how those problems can be addressed.
- Conduct regular reviews. Once launched, spend time regularly double-checking the code and processes to make sure the pool is running safely.
- Research regulatory requirements. Investigate the various laws, both on the federal and local levels, that apply to the pool.
- Understand the technical aspects. Be fluent in the fundamentals of the technology you’re using.
It’s an unfortunate situation, but it can serve as a cautionary tale for any aspiring blockchain entrepreneurs out there. If you want to avoid a situation like the one faced by Hedera’s team, it’s important to do your due diligence and research all the potential risks before launching.
Otherwise, you could find yourself headed straight for a major gamble — and losing big time.
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