New Free DAO, a decentralized finance (DeFi) protocol, faced a series of flash loan attacks on Thursday, resulting in a reported loss of $1.25 million. The price of the native token has dropped by 99% in the wake of the attack.
Unlike normal loans, several DeFi protocols offer flash loans that allow users to borrow large amounts of assets without upfront collateral deposits. The only condition is that the loan must be returned in a single transaction within a set time period. However, this feature is often exploited by malicious adversaries to gather large amounts of assets to launch costly exploitations targeting DeFi protocols.
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