Volo Protocol, a decentralized finance protocol built on the Sui blockchain, has suffered a security breach that led to the loss of approximately $3.5 million in digital assets.

 

In an effort to maintain transparency, the team in an X post on Wednesday publicly announced the security breach. According to the team, the attack only affected assets in selected vaults, including Wrapped Bitcoin (WBTC), Matrixdock Gold XAUm, and USDC (USDC).

 

 

On detecting the breach, the team said it acted quickly to contain it and minimize further damage. It stated, “We detected the attack, immediately notified the Sui Foundation and ecosystem partners to contain the damage, and froze the vaults to prevent any further exposure.”

 

As of the time of its first reporting on the incident, the Volo team said that the $28 million in total value locked across other vaults was safe, adding that all vaults on the protocol were temporarily frozen pending a full postmortem and remediation. The team also said it was in damage control mode and was actively working with on chain investigators and ecosystem partners to recover the stolen funds.

 

The team released updates on the hack

Since the hack happened, the Volo team has, in three separate updates, transparently informed the community about the efforts being made to recover the stolen funds.

 

In the first two updates, the team said it was already working with ecosystem partners and had successfully frozen approximately $500 million of the stolen funds, while also intercepting and blocking the hacker’s attempt to bridge 19.6 WBTC. According to the Volo team, these funds were no longer under the hacker’s control.

 

In a third update, the team said it had already frozen $2 million of the stolen funds, and that together with ecosystem partners and security teams, it had flagged the hacker’s EVM addresses across the majority of centralized exchanges, swappers, and KYC tools.

 

The Volo protocol hack came shortly after the KelpDAO exploit and the Drift Protocol exploit, which led to a combined loss of over $570 million, and are currently the largest DeFi hacks that have occurred this year. So far, over $770 million has been lost to DeFi hacks this year.

 

 

In a Thursday post on X, stablecoin issuer Circle announced that it will be launching cirBTC, its own version of wrapped Bitcoin for institutional markets.

 

 

cirBTC will maintain a 1:1 backing with Bitcoin and will be launched on Ethereum as well as on Circle’s Layer-1 Arc blockchain. Circle also says the yet-to-be-launched crypto asset will be credible, claiming it was designed with the same foundations as USDC and EURC.

 

Despite the existence of dozens of wrapped Bitcoin products in the crypto market, Circle says several features set cirBTC apart from other versions of wrapped Bitcoin:

• Institutional-grade global standard: cirBTC is well-suited for over-the-counter (OTC) desks, market makers, and lending protocols, as well as other institutional crypto users seeking a neutral, secure, and high-performance tokenized version of Bitcoin.
• Verifiability: cirBTC reserves can be independently verified onchain in real time by any counterparty.
• Interoperable infrastructure: cirBTC is designed to be multi-chain compatible. Although it will launch on Ethereum and Arc first, support is expected to expand to additional chains over time.

 

Circle Joins the Wrapped Bitcoin Race

With cirBTC now in place, Circle will compete with the likes of BitGo, Coinbase, and Ren Protocol, whose wrapped versions of Bitcoin have long dominated the crypto and DeFi space.

 

BitGo, in combination with Kyber Network and Ren Protocol, launched its own version of wrapped Bitcoin (WBTC) in 2018. WBTC was introduced with the goal of bringing Bitcoin liquidity into Ethereum and DeFi protocols, and since its launch, it has been widely used for DeFi lending, borrowing, and trading.

 

WBTC currently holds a dominant market share of about 85% of the total wrapped Bitcoin market, with a market capitalization of approximately $7.9 billion, a 1:1 backing with Bitcoin, and roughly 119,000 WBTC in circulation.

 

Cryptocurrency exchange Coinbase also launched cbBTC, its own version of wrapped Bitcoin, in 2024. cbBTC was introduced with the goal of providing institutional-grade, exchange-native wrapped Bitcoin that would serve as an alternative to BitGo’s WBTC while tightly integrating into Coinbase services and the Base ecosystem.

 

cbBTC currently has a market capitalization of about $5.9 billion, a circulating supply of approximately 88,000 cbBTC tokens, and a 1:1 backing with Bitcoin.

 

To bring Bitcoin liquidity into DeFi, several other crypto exchanges have also created their own versions of wrapped Bitcoin, including Binance Wrapped BTC (BTCB), Kraken Wrapped BTC (kBTC), and OKX Wrapped BTC (XBTC).