What are the security risks and vulnerabilities of XCN token after the $2.1 million Onyx protocol attack?

NFT Liquidation Contract Vulnerability: The $2.1 Million Onyx Protocol Attack

On November 1, 2023, Onyx Protocol suffered a devastating attack resulting in the theft of 1164 ETH, equivalent to approximately $2.1 million at that time. The exploit exposed a critical flaw in the protocol's NFT Liquidation contract, which failed to properly validate untrusted user input, allowing attackers to manipulate the system's core mechanisms.

The vulnerability exploited during this attack is known as an empty pool attack, a well-documented issue originating from the Compound V2 codebase. This flaw emerges when new, unfunded markets are created within a protocol, creating conditions that skilled attackers can manipulate. Since Onyx Protocol operates as a fork of Compound Finance, it inherited these architectural weaknesses. The attackers identified and exploited this specific gap in the NFT Liquidation smart contract, demonstrating how foundational vulnerabilities in forked protocols can cascade into major security breaches.

This incident exposed a troubling pattern within the DeFi ecosystem. Rather than being a novel attack vector, the empty pool attack represents a known vulnerability that developers should have mitigated through proper code auditing and validation mechanisms. The fact that Onyx Protocol fell victim to this well-documented flaw highlights critical gaps in security practices and code review processes within the industry.

XCN Token Security Risks: Low Safety Rating and Frequent Technical Vulnerabilities

The XCN token carries a substantial risk score of 46%, placing it in the "potentially risky" category that warrants investor caution. This assessment reflects underlying technical vulnerabilities inherent to the platform's blockchain infrastructure. Smart contract vulnerabilities represent a critical concern, as exploits targeting these systems could rapidly erode investor confidence and trigger significant market disruptions. The reference data emphasizes that even a single successful security breach could substantially impact token value and protocol stability.

Beyond smart contract weaknesses, XCN exhibits unusual trading patterns with abnormal buy/sell ratios that signal potential market manipulation risks. These technical vulnerabilities extend across multiple vectors—from code defects to protocol-level security threats—creating a complex risk environment. Security breaches represent more than theoretical concerns; they constitute actionable threats to token holders. The low safety rating reflects accumulated evidence of system fragility, suggesting that technical remediation remains incomplete. For investors evaluating XCN exposure, these vulnerability clusters demand thorough due diligence before capital deployment.

Centralized Custody Risk: Onyx DAO's $40 Million XCN Compensation Facility and Protocol Dependency

Onyx DAO's establishment of a $40 million XCN compensation facility through LDA Capital illustrates both a proactive damage control measure and an underlying structural vulnerability within the protocol. This centralized custody arrangement concentrates significant token reserves under DAO governance, creating a single point of failure that contradicts decentralized finance principles. When the protocol experienced its $2.1 million attack, the dependency on this centralized facility became evident as the community looked to a concentrated treasury rather than distributed security mechanisms.

The compensation structure reveals how Onyx Protocol has become heavily dependent on institutional support and centralized decision-making. By relying on LDA Capital's commitment and DAO treasury management, the ecosystem demonstrates protocol dependency on external funding sources rather than achieving financial resilience through decentralized mechanisms. This centralized custody model exposes XCN holders to governance concentration risks, where token distribution decisions rest with a relatively small group of DAO members and institutional partners.

Furthermore, maintaining such a substantial XCN reserve in a compensation facility creates liquidity concentration risks. Large token holdings in custody solutions remain vulnerable to similar attacks that compromised the protocol initially. The facility's existence, while providing immediate relief, reinforces the problematic pattern of centralized risk management in what should be a decentralized ecosystem. This arrangement demonstrates that Onyx Protocol's security posture remains constrained by its reliance on centralized solutions rather than achieving true protocol-level security that eliminates dependency on large institutional treasuries or DAO-controlled compensation mechanisms.

FAQ

XCN token在Onyx协议$2.1M攻击中具体遭受了什么损失？

XCN token在此次攻击中损失约$2.1M。攻击者利用Onyx协议的智能合约漏洞，通过闪电贷等手段获取了流动性池中的资金。该事件暴露了协议风险管理的不足。

How were the security vulnerabilities of the Onyx protocol exploited?

The Onyx protocol vulnerability was exploited through a rounding error. Attackers targeted the newly deployed oPEPE market, which had minimal liquidity and was only days old. This flaw allowed them to manipulate calculations and extract approximately 2.1 million dollars in assets from the protocol.

What impact does this attack have on the fund safety of XCN token holders?

The attack exposed XCN holders to significant risk through the $2.1 million theft of 1,163.53 ETH via flash loan exploit. Holders faced direct capital loss exposure and protocol vulnerability, requiring enhanced security measures and compensation mechanisms from Onyx Protocol developers.

What measures did the XCN development team take to fix this vulnerability?

The XCN team rapidly patched the vulnerability using risk-based management strategies. They prioritized critical issues, defined SLAs for timely response, and implemented immediate fixes for high-risk exploits to prevent further losses.

How should I defend against similar DeFi protocol attacks?

Use multiple trusted oracles, implement time delays between actions, employ time-weighted average prices (TWAP), avoid single data sources, and maintain sufficient liquidity checks to prevent price manipulation attacks.

Has XCN token's smart contract undergone security audits?

Yes, XCN token's smart contract has undergone security audits. It utilizes OpenZeppelin libraries and Solidity safety features designed to prevent common vulnerabilities and ensure contract integrity.

After the security incident, what is XCN's recovery outlook?

XCN shows cautiously optimistic recovery prospects with expected short-term price volatility. Market analysts predict potential gains driven by improved security measures and community confidence restoration. Long-term stability depends on project fundamentals and sustained investor sentiment.