The BXH theft incident reveals the risks associated with DeFi Smart Pool.

Recently, a decentralized yield protocol on the BSC chain experienced a significant security incident, resulting in the loss of approximately $139 million in cryptocurrency assets. According to security agencies' analysis, the incident originated from malicious modifications to the management permissions of the protocol, allowing attackers to transfer project assets.

This incident has sparked widespread attention, with people questioning why the protocol can easily hand over the funds management authority to external personnel. This simple method of stealing coins raises suspicions about potential internal issues. Currently, the authorities have only stated that it was caused by a private key leak and are offering a $1 million reward for help in recovering the funds.

What is even more concerning is that this incident has also affected multiple Smart Pool projects that rely on the protocol. Due to the withdrawal function being disabled, some large Smart Pools have also had to suspend user withdrawals. This reflects the potential risks present in the current Smart Pool model.

Smart Pool usually earns platform tokens by frequently operating between various high-yield lending protocols and amplifying returns using leverage. However, this model also increases risks while boosting returns; any problem in any link can lead to the collapse of the entire system.

Therefore, the operation of the Smart Pool should be more transparent, allowing investors to understand the flow of funds and make their own choices. Some mature projects have adopted public discussions and voting methods to determine investment strategies. In contrast, some projects have not done enough in terms of information disclosure.

From the perspective of traditional finance, the current operating model of the Smart Pool is difficult to sustain. In traditional fields, only large institutions like banks are allowed to engage in circular lending to expand the money multiplier effect, while ordinary investors are restricted due to their limited risk control capabilities.

The risks of the Smart Pool can mainly be divided into three categories: low-risk single asset collateral, medium-risk liquidity token strategies, and high-risk multi-layer lending strategies. Each additional protocol adds a layer of potential risk, which is something to be cautious about.

In the future, Smart Pools may develop towards more specialized directions, such as options combinations and synthetic asset arbitrage, which are proven models. This requires a higher level of professional threshold and reflects the value of professional institutions. In contrast, the currently popular circular lending model has a lower technical content and is difficult to sustain in the long term.