BONK DAO Loses $20 million to Governance Attack

Key Insights

• Solana’s flagship memecoin, BONK INU, falls by more than 10% after an exploit.
• The memecoin governance community, BonkDAO, was targeted with a malicious governance proposal.
• The project says it has informed law enforcement agencies of the attack

Bonk Price fell after BonkDAO reported that an unknown entity drained treasury tokens through governance. The attack hit the Solana-based memecoin project and forced the team to contact law enforcement.

The move added pressure on bonk crypto during a weak period for memecoins. Traders reacted because the exploit targeted governance, not only wallet or exchange security.

Exploit Targets Decentralized Governance

While BONK DAO has not provided any details about the attack, onchain evidence shows that the attacker exploited the decentralized governance process. They passed a malicious governance proposal that allowed them to transfer treasury funds to their own wallets.

In order to do this, the attacker reportedly bought $4 million worth of BONK tokens across multiple exchanges. This gave them enough voting power to push the malicious proposal and vote on it before the community could react

This attack does not exploit any smart contract vulnerability and is not a popular DeFi exploit. However, there have been instances of bad actors using it, including in 2023 with Compound DAO.

The incident further raises concerns about DAO governance security and the need for safeguards to prevent similar exploits. In response to the incident, Kraken temporarily suspended deposits and withdrawals for the memecoin.

What is Next for BONK?

Meanwhile, the identity of the attacker and their motive remain unclear. While there are speculations that this could be a bad actor, onchain records suggest the attacker may have a different motive.

The malicious proposal that enabled the attacker to drain funds suggests the hacker may be a disgruntled community member.  BONK has gone from being one of the high-flying memecoin on Solana in 2024 to falling 92% from its peak.

It stated that the hacker plans to implement “Sowellian governance, install new members and council, rebuild from the ashes, monetize holdings, stop the bleeding.”

Interestingly, the attacker has now moved all the drained treasury funds to a new DAO instance called BONK 2.0. They have now launched a new proposal titled “a new chapter,” while stating that this is the start of the process, and more updates will follow. It is unclear what will happen next and whether the BONK DAO team will address this issue.

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