Rising from the Ashes : Beanstalk Relaunches Following $77 Million Governance Exploit

By kev_nag | kev_nag | 8 Aug 2022

On August 6, 2022, Beanstalk Farms tweeted:

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Photo Source

If you have forgotten the details concerning this exploit, you may review the same in a previous article: [Nagoda, K. Beanstalk Farms $76 Million Exploit and its Path Forward. (Accessed August 8, 2022)].

Ethereum-based algorithmic stablecoin project Beanstalk Farms has relaunched its protocol just under four months after going offline after suffering a devastating $77 million governance exploit. The protocol and its governance have been paused since April following the governance exploit and flash loan attack, but were relaunched as of Aug. 6 in an event called the ‘Replant.’

[Quarmby, B. Once-hacked for $77M, Beanstalk’s algo stablecoin protocol relaunches. (Accessed August 8, 2022)].

"However, the stablecoin has made a strong comeback. Per the statement shared by Beanstalk’s creator company Publius: 'Beanstalk has come out on the other end of this ordeal stronger than ever. It is a testament to the creditworthiness of the protocol and its potential to help realize a permissionless future.” [Mirza, J. Beanstalk Stablecoin Relaunches Four Months After Getting Hacked For Nearly $182 Million.. (Accessed August 8, 2022)].

"In addition to this, the firm highlighted how it has completed two financial audits from ‘top-notch smart contracting auditing firms’ Trail of bits and Halborn. The organization further noted how it believes that the protocol effortlessly solves existing stablecoin problems and will permit blockchain-based enterprises to compete with non-blockchain-based businesses through the creation of a low volatility business blockchain native asset. '…the protocol solves existing problems concerning stablecoins and will allow blockchain-based businesses to finally be able to compete with non-blockchain-based ones through the creation of a low-volatility blockchain-native asset with competitive carrying costs (Bean).” [Id].

The team also emphasized that new application building is already underway on the network, with the Root Protocol having announced a $9 million seed round on July 26 to create marketplaces for finance, commerce, and sports betting on Beanstalk […] The project needs to make significant progress before it can match its prior metrics that existed before the breach. The market valuation of Beanstalk’s algorithmic stablecoin BEAN reached a high of $100 million in mid-April, but as of this writing, it is just around $284K, and the asset is trading at a low of $0.0039; data from CoinGecko reveals […] Nonetheless, Beanstalk has raised around $10 million from a funding round to restore the stolen funds and help users in trusting the project back.

[Pandey, A. April-hacked Beanstalk protocol and algorithmic stablecoin relaunches. (Accessed August 8, 2022)].

It is important to note that given the history and cause of the exploit, “Publius, the developer team behind the BEAN stablecoin and protocol, said it has now transferred protocol governance to a community-run multisig wallet until it implements a secure on-chain governance mechanism” [Id].

In a blog published August 6, 2022, Beanstalk noted:

Now, the Beanstalk experiment is out in the wild once again. It’s impossible to predict how it will perform, but Beanstalk Farms’ belief in the possibilities for a permissionless fiat stablecoin is unwavering.

[Beanstalk. Beanstalk’s One Year Anniversary. (Accessed August 8, 2022)].

At present, it is unclear whether Beanstalk is good enough to sustain itself in perpetuity. There still remain some inefficiencies in the model. However, Beanstalk is likely good enough to continue to sustain itself in the short term. With the benefit of sufficient future positive iterations by the DAO, hopefully Beanstalk can sustain itself in the long term. We are very excited about the opportunity to continue participating in discourse with other members of the Beanstalk community on further improvements.

[Publius. Thoughts Before the Barn Raise. (Accessed August 8, 2022)].

“But the thing about a system like Beanstalk is that it works until it doesn’t. You can never actually know if it works, only that it has worked so far. So much uncertainty is scary, particularly without a clear definition of success. Perhaps we are foolish for trying. While nobody can answer the above questions at present, the beauty of a free market is that time will” [Id].

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