Flooring Protocol loses NFTs worth $1.5M in recent security breach

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A security breach struck decentralized liquidity solution for non-fungible tokens (NFTs), Flooring Protocol, on December 17, resulting in the theft of three dozen Pudgy Penguins and 15 Bored Ape NFTs.

According to blockchain security firm SlowMist, the platform might have fallen victim to a hacker attack, with users promptly advised to revoke contract authorizations as a precautionary measure.

Developer and Web3 builder foobar the incident, saying, “looks like yet another exploit in the wild, 0x7E5433F02F4bf07C4f2a2D341C450E07d7531428 contract just stole 14 bored apes and 36 pudgy penguins.”

The attack resulted in a loss of NFTs worth collectively at 690 Ether (ETH). The amount is equal to $1.5 million and $1.6 million, depending on ETH price.

Flooring Protocol’s development team responded by deploying a fix within hours of the attack. They reassured the community that the main smart contract remained secure and that assets in vaults and safeboxes were unaffected.

The protocol released a statement through its official account, explaining, “There is an exploit on FP’s peripheral/multi-call contract, which led to the hack. Deployed a fix 2 hours ago, which we believe patched the issue. Still monitoring. Talking to devs and audits. The main contract is safe. Assets in vaults and safeboxes are not affected.”

Reports indicate that the attack either targeted the platform’s peripheral or multi-call smart contract. After the successful breach, the hacker is reported to have subsequently sold the stolen NFTs on the NFT market Blur.

Boring Security, a security protocol funded by ApeCoin DAO, suggested that users who lost their NFTs might not be able to recover them, as the hacker had already liquidated the assets. Meanwhile, SlowMist founder Yu Xian advised users to cancel authorization for contracts starting with 0x3eb8 and 0x49AD.

Previous NFT Trader attack

The Flooring Protocol attack occurred shortly after the P2P NFT platform NFT Trader experienced a similar breach. During the NFT Trader attack, several blue-chip NFTs were stolen, with the hacker demanding their holders pay a 10 percent bounty of the NFTs’ market value.

However, several hours later, the hacker was reported to be returning some items, including a couple of Mutant Ape Yacht Club pieces and a World of Women NFT. The hacker’s location was later disclosed by a third party known as a “lady cleaner.”

Flooring Protocol’s past, current performance

Flooring Protocol, launched two months ago on October 15, quickly gained traction for its unique approach to breaking NFTs into ERC-20 tokens. The platform became a popular hub for Azuki Elementals, Pudgy Penguins and y00ts NFT collection holders, which led to an increase in its trading volume.

In just one day after its launch, Flooring Protocol achieved significant success by accumulating a total of 914 Azuki Elementals, 191 Pudgy Penguins and 365 y00ts, resulting in a total value locked (TVL) surpassing 1,800 ETH.

The protocol’s native token, FLC, experienced a momentary surge, briefly exceeding a fully diluted valuation of $4 billion. The circulating supply consists of 25 billion FLC tokens, allocating 40 percent for community support, with a quarter of the total designated as a reserve. Notably, half of the community’s 40 percent allotment is specifically earmarked for liquidity incentives through staking.

Despite the challenges faced by protocols like Flooring Protocol, the industry as a whole has made strides in fortifying its defenses. A recent TRM Labs research study indicated a significant decrease in cryptocurrency hack volumes in 2023, with more than a 50 percent reduction compared to the previous year.