An attacker manipulated the conversion rate of a wrapped tokenized Alphabet share, inflating its collateral value roughly 78-fold and leaving Edel Finance with about $403,000 in bad debt. Edel said depositors will be made whole.
An attacker manipulated the conversion rate of a wrapped tokenized Alphabet share, inflating its collateral value roughly 78-fold and leaving Edel Finance with about $403,000 in bad debt. Edel said depositors will be made whole.
The incident highlights an added risk for tokenized equities used in decentralized finance. Wrapping and conversion mechanisms introduce another layer between an underlying stock and the collateral value recognized by a lending protocol, creating potential weaknesses even when external market data is accurate.
Edel Finance paused its version-one lending protocol after an attacker manipulated the exchange rate between tokenized Alphabet stock GOOGLx and its wrapped form, wGOOGLx. The move inflated the collateral’s reported value to about 78 times its correct level, allowing the attacker to borrow real assets and create roughly $403,000 in bad debt.
The incident highlights an added risk for tokenized equities used in decentralized finance. Wrapping and conversion mechanisms introduce another layer between an underlying stock and the collateral value recognized by a lending protocol, creating potential weaknesses even when external market data is accurate.
Edel said its Chainlink price feeds correctly reported Alphabet shares at around $357. The vulnerability instead involved the mechanism that converted GOOGLx into wGOOGLx, enabling the wrapped asset to be mispriced inside the protocol.
The platform said it detected and contained the exploit, froze its version-one contracts and warned users not to interact with them. It is tracing the attacker’s transactions, coordinating with exchanges and has offered a white-hat settlement under which most funds could be returned within a specified period.
Edel said it will absorb the bad debt and restore depositor balances one for one. The company is also deploying a redesigned version-two pricing system intended to prevent similar manipulation and plans to publish a full technical account of the incident.
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