DeFi Security Alert: Cork Protocol Loses $12M in Major Hack

A Deeper Dive into DeFi Exploits

The decentralized finance (DeFi) ecosystem has once again been shaken by a major security breach. Cork Protocol, a risk-trading platform designed to hedge against stablecoin de-pegging events, recently suffered a $12 million exploit due to a malicious smart contract—an incident that highlights the vulnerabilities that plague DeFi.

The Attack Breakdown

On May 28, 2025, hackers targeted Cork Protocol’s wstETH:weETH trading pair, draining 3,761.87 wstETH, which was quickly converted into ETH. The attack relied on a fake smart contract, enabling the hacker’s wallet to siphon funds undetected.

Cork Protocol DeFi Exploit
Cork Protocol DeFi Exploit
The Bigger Problem: How DeFi Hacks Happen

Cork Protocol’s breach is part of a growing trend of DeFi attacks, exposing critical flaws within the ecosystem. Hackers often exploit smart contracts, liquidity pools, and governance mechanisms to siphon funds. Here are the key methods they use:

  • Smart Contract Exploits: Bugs in self-executing code allow attackers to manipulate transactions. Reentrancy attacks, logic flaws, and integer overflow exploits are common.
  • Flash Loan Manipulation: Hackers borrow massive amounts of crypto without collateral, inflating asset prices and draining liquidity pools.
  • Oracle Exploitation: DeFi platforms rely on oracles for price data—if manipulated, they can cause devastating financial loss.
  • Governance Attacks: By acquiring enough governance tokens, attackers can pass malicious proposals and modify protocols for personal gain.

Cork Protocol’s Response

Upon discovering the breach, founder Phil Fogel immediately froze all smart contracts, preventing further damage. While only one market was affected, Cork Protocol took the proactive step of pausing all operations to ensure security.

What’s Next?

Despite this setback, Cork Protocol remains a major player in DeFi, securing funding from a16z, Orange DAO, and Unbounded Capital. The platform’s mission—to protect $300M in assets—continues, but this exploit serves as a wake-up call for the industry. As DeFi grows, security must evolve to stay ahead of cyber threats.

For more information on the Cork DeFi ecosystem: Cork: The Tokenized Risk Primitive Is Now Live

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