The DETH giant whale was stolen, and the community is most concerned about whether they can buy the dip after it unmoors

Author: Fu Ruhe, Odaily Planet Daily

Today, another large-scale theft incident occurred in the crypto world. The security platform Scam Sniffer posted on the X platform that someone lost 15,079 fwDETH, worth approximately $35 million, after signing a "permit" phishing signature. The hacker then sold the stolen funds on the market, swapping DETH for ETH. Due to insufficient liquidity in the DETH pool, only 14,079 DETH was exchanged for 2,288 ETH, which still led to DETH losing its peg. According to CoinGecko data, DETH once dropped to 91.58 USDT, a decline of over 90%, and has now rebounded to 1135 USDT, but it has not yet escaped the de-pegging status.

According to Lookonchain monitoring, the address that lost $36 million worth of fwDETH due to the phishing attack is suspected to be related to Continue Capital.

Just an hour later, Continue Capital co-founder Lin Xiahong posted on the X platform, stating, "I accidentally exposed that I haven't exited the circle and passively made a charitable headline." Additionally, Lin Xiahong revealed the details of the theft in his social media post, saying, "Recently, my Gmail has been frequently attacked by hackers, often popping up fake dialog boxes. Although I refused, it seems impossible to stop. Worse, hackers impersonated Google customer service and called, claiming someone was trying to access my account and asking for identity confirmation."

According to Lin Xiahong, it is unclear how the theft occurred, but it is evident that online scam tactics are becoming increasingly sophisticated.

It is reported that this phishing attack was conducted by hackers using Permit signatures. Contracts that support Permit can authorize transactions through offline signatures, bypassing Approve and without paying gas fees. Once authorized, third parties gain corresponding control and can withdraw the assets authorized by users at any time.

Subsequently, the official Duo Exchange responded, "We have noticed recent phishing attacks targeting some whales on Duo. Over 10,000 DETH were sold on the AMM, causing the DETH price to decouple. DETH is designed to always be redeemable for 'opened' ETH at a 1:1 ratio on Duo. The Duo protocol itself is secure and continues to operate as expected. We are closely monitoring the situation and working with affected parties."

The overall process of this theft incident is as described above, but what truly concerns the community is whether it is possible to buy the dip on DETH. To this end, Odaily Planet Daily has collected key points from Duo Exchange's official documentation and social media discussions to explore the potential gains and risks of buying the dip.

Does de-pegging mean a buying opportunity? But buying the dip comes with anxiety

In most theft incidents that lead to a stablecoin or wrapped token losing its peg, some investors in the market adopt a buy-the-dip arbitrage strategy to gain short-term profits, such as the past Luna and the recent VUSD. After the de-pegging of DETH, although some users still participated in buying the dip, the discussions on social media have made dip buyers anxious.

The main reason is that, according to Duo Exchange's official documentation, the protocol managers control the final emergency switch. In emergencies, LP 1 and LP 2 can directly withdraw their principal from the contract without interacting with the vault contract.

In simple terms, when issues arise with the protocol, the officials can use a "backdoor" to withdraw the ETH principal previously deposited by users, thus avoiding risks. This viewpoint has caused panic in the market, leading some dip buyers to regret their buying actions.

However, fundamentally, this incident involved a large holder being stolen, while the protocol continues to operate normally, which does not meet the conditions for an emergency situation as described above.

Moreover, the official response emphasized: "DETH is designed to always be redeemable for 'opened' ETH at a 1:1 ratio on Duo." According to the content shared by the official account @OxAerlion, "With the current exchange rate of 1 ETH to 2 DETH, market buyers of DETH will not incur losses in the coming days or weeks." This may also hint at the possibility of profit from buying the dip.

Below, we have also organized the pros and cons of buying the dip on DETH based on the protocol documentation and community discussions for your reference.

Favorable Factors:

• Potential arbitrage opportunity: The current exchange ratio of DETH to ETH is 2:1, significantly lower than its historical average, providing arbitrage opportunities for dip buyers. There are views in the market that as the market gradually recovers, investors may achieve up to 40% immediate returns. This means that if market conditions improve, dip buyers can realize profits at a lower cost.
• 1:1 supported security: DETH is 1:1 backed by ETH on Duo Exchange. This indicates that as long as the protocol itself is secure, the DETH held by dip buyers still has value. The current de-pegging situation is unrelated to the protocol's redemption mechanism but is due to third-party security issues. Therefore, theoretically, the long-term value of DETH remains supported.
• Market demand and liquidity: Dip buyers purchasing DETH in the market can drive up demand and increase liquidity. As more investors wish to redeem their DETH, market liquidity may strengthen, thereby pushing up prices. Additionally, dip buyers may find other users in the market willing to purchase their held DETH at a discount.

Unfavorable Factors:

• Hacker risks and market uncertainty: Recent hacker attacks directly led to the sharp decline in DETH prices, putting dip buyers at additional risk. Although there are arbitrage opportunities, if the project team chooses to take a snapshot and compensate for the losses of large holders, the $DETH held by dip buyers may quickly depreciate, resulting in losses.
• Redemption restrictions and liquidity issues: According to the protocol, users who have not deposited ETH on DUO cannot redeem DETH at a 1:1 ratio. This means that dip buyers face restrictions when redeeming and need to rely on other investors with existing positions for trading. This redemption restriction increases the difficulty of liquidity and trading, potentially leading dip buyers to face longer waiting times during the market recovery process.
• Bad debt risks and market pressure: Lending protocols like Orbit Lending may face a large amount of bad debt, which puts pressure on market recovery. Since these protocols have been exploited by arbitrageurs, market liquidity and confidence have been affected, potentially leading to further depreciation of DETH.
• Psychological factors and market sentiment: In the current market with low sentiment, investors' confidence in DETH may be impacted. If the market is generally pessimistic, dip buyers may face difficulties in liquidating their holdings even if they possess DETH.