A sophisticated hack on decentralized exchange KiloEx has left users reeling with losses of around $7 million, but the platform’s swift recovery and community-led efforts offer a cautionary tale of high-risk trading in DeFi.
KiloEx, a decentralized exchange (DEX) for trading perpetual futures, said Friday it recovered all of its hacked funds after a sophisticated attack this week left users reeling with losses of around $7 million. The DEX is awarding 10% of the recovered amount as a bounty to the ‘white hat hacker’ who was involved in the process.
KiloEx is a decentralized, open-source protocol designed to facilitate the exchange of digital assets between different blockchain networks.
Developed by the Kilo team, it enables interoperability and liquidity across various blockchains, promoting a more seamless and efficient trading experience.
By leveraging smart contracts and advanced cryptography, KiloEx ensures secure and transparent transactions.
The protocol's architecture is built on top of existing blockchain infrastructure, allowing for easy integration with existing networks.
A Flaw in Price Oracle System Exposed
The attacker used a wallet funded through Tornado Cash and executed a series of transactions on multiple blockchain networks, including Base, BNB Chain, and Taiko, to take advantage of a flaw in KiloEx’s price oracle system. Oracles are blockchain-based tools that relay outside data to a blockchain, where smart contracts use them to make decisions for financial applications.
Community-Led Recovery Efforts
One growing trend highlighted by KiloEx’s hack resolution is that the community came together to recover the funds rather than wait for long-drawn court battles. However, the exploit still serves as a stark reminder of the serious risks in decentralized finance, where small vulnerabilities could lead to massive losses and test trust in the code.
Industry-Wide Risks
The crypto industry has been plagued by multiple hacks and exploits, resulting in billions of dollars lost to attackers. Blockchain security firm CertiK reported that hackers stole $1.67 billion worth of crypto in the first quarter of 2025, a 303% rise from the previous quarter. Most of Q1’s losses were attributed to the massive $1.45 billion Bybit hack.
The Importance of Vigilance
Only 0.38% of stolen funds were returned compared to 42.09% in the previous quarter, highlighting the need for vigilance and proactive measures to prevent such attacks. As KiloEx’s successful recovery demonstrates, community-led efforts can play a crucial role in mitigating losses, but it is essential to address vulnerabilities before they become major issues.
The Future of DeFi Security
The outcome of this exploit underscores the importance of prioritizing security in decentralized finance. By investing in robust security measures and fostering a culture of vigilance, the industry can reduce the risk of such attacks and protect investors’ assets.
Decentralized Finance (DeFi) platforms have gained popularity due to their promise of secure and transparent financial transactions.
However, DeFi security risks are a growing concern.
According to a report by Chainalysis, over $2 billion was stolen in DeFi hacks in 2021.
The most common attacks include smart contract vulnerabilities, phishing scams, and flash loan exploits.
To mitigate these risks, users can utilize secure wallets, enable multi-factor authentication, and stay informed about platform updates.
