The BProtocol used a Defi arbitrage tool in order to push a governance vote that it proposed on the Maker protocol as we can see in today’s cryptocurrency news.
BProtocol proposed a governance vote on the Maker protocol and to make sure it passed, it used a flash loan to borrow the MKR tokens that they needed. Maker teams are making changes to avoid future governance attacks as well:
“Want something fast in decentralized finance but don’t want to wait for that whole decentralized governance thing? Just use a flash loan!”
The BProtocol founded by the former CTO of Kyber used a single transaction to push through his own proposal on the Maker protocol. Flash Loans allow the Defi users to take out large loans for a fraction of percent provided that they can pay back the full amount during one single ETH block. They are typically used to take advantage of the arbitrage opportunities so that a trader can buy a token at a low price and sell in another place at the same time. BProtocol used 50,000 ETH purchase borrowed wrapped ETH from decentralized exchange DyDx. If put the wrapped ETH on Aave to borrow $7 million in MKR governance tokens which allow holders to vote on proposals affecting Maker’s operations. It also locked the tokens to vote for its proposal then unlocked them in order to return the funds to Aave.
— Maker (@MakerDAO) October 27, 2020
According to Maker, MRK locked in a voting contract is only accessible “when the wallet used to set up the voting contract.” Maker said that BProtocol had been forthright about its actions in a forum post today but the governance facilitator wrote:
“[BProtocol’s] actions are a practical example for the community that flash loans can and may impact system governance and highlight that MKR market liquidity needs to be actively monitored.”
It noted that more than 63,000 MKR is now available for flash loans on Defi platforms like Aave, Uniswap, and Balancer. Maker admins are making a few changes, as well as they, are asking MKR holders not to put their governance tokens on these platforms so they can be used in governance attacks. Also, they are delaying the plans to include yearn finance and Balancer as collateral for loans that are scheduled for this week. Its mandating 100,000 MKR is necessary to unlock certain capabilities as well which is above the outstanding liquidity available.
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