Hackers have managed to drain funds from the smart contracts of the defunct decentralized finance (DeFi) lending protocol, Yield Protocol. Yield Protocol shut down in December 2023, citing an inability to keep up with business demand and global regulatory pressures. Despite warnings to investors to close their positions and withdraw funds, an unknown hacker stole approximately $181,000 worth of crypto assets from Yield's strategic contracts on the Arbitrum blockchain.

The hack was first announced by blockchain investigation firm PeckShield and later confirmed by CertiK. According to CertiK's investigation, the attacker exploited a discrepancy between the pool token balance and total supply, using flash-loaned assets to withdraw extra pool tokens.

Official support for Yield Protocol ended on Feb. 2, and although there has been a history of resurgence, an attempt to recover the hacked funds seems unlikely. In March 2023, Yield Protocol, along with 10 other DeFi protocols, suffered losses after the attack on the noncustodial lending protocol Euler Finance. However, by July 2023, Yield Protocol had fully recovered from the Euler flash loan attack.

Blockchain security firm Immunefi recently reported a 23% decline in losses due to hacking and scams in the first quarter of 2024 compared to 2023. The report identified 46 hacking incidents and 15 cases of fraudulent activities, with the cross-chain bridge protocol Orbit Bridge losing the most at $81.7 million.

The incident highlights the ongoing security challenges faced by DeFi protocols and the importance of robust security measures in protecting user funds in the DeFi space.