Beanstalk price prediction: Network hit by $76m attacker

• Updated

An exploiter stole a massive sum from stablecoin operator Beanstalk, threatening BEAN’s future

Someone harvesting a green bean                                 
Beanstalk uses two liquidity pools to stabilise the price of BEAN to $1 – Photo: Shutterstock
                                

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Beanstalk is innovating the stablecoin industry with its use of credit to peg its BEAN coin to $1. But the network’s entire future has been thrown into question after a recent attacker stole $76m of non-user assets.

According to Beanstalk, the attacker exploiting a governance weakness in the network.

With most stablecoins, forecasts are not relevant as their goal is to stay at a constant value. Beanstalk's situation is different, as its stablecoin has plummeted in value since the attack. Experts are now conflicted over the latest BEAN price prediction and the future of the network.

What is Beanstalk (BEAN)?

Stablecoins have solved a widespread problem affecting the cryptocurrency industry. Investors can escape the volatility of cryptocurrencies by using a coin that is pegged to a fiat currency. This is usually achieved through a reserve of currency such as the US dollar.

However, this can result in supply shortages, which occurs when there is more demand for the stablecoin than fiat currency in the reserve.

Beanstalk created a new system to enable cryptocurrencies, one which escapes these reserves and the problems that accompany it. The BEAN cryptocurrency is stabilised by credit. The Beanstalk network uses borrowing pools on Uniswap to maintain the price of BEAN, which is pegged to $1.

Specifically, Beanstalk has two Uniswap pools, a USDC and ETH pool along with a BEAN and ETH pool. It wrote in a blog post: “By trading against ETH instead of USDC directly, Beanstalk minimizes exposure to the centralized operators of USDC.”

The price of a BEAN becomes pegged to $1 when the ratios of the two liquidity pools are identical. It adjusts the supply every “season”, a timekeeping measurement on the network that equates to roughly one hour.

Motivation for creditors

An integral component of the Beanstalk network is the group of lenders who maintain the price by supplying cryptocurrencies to the pools. It noted this in the same blog post: “The faster Beanstalk can attract creditors, the more stable the Bean price.”

Creditors are rewarded with another token under the name Pods. These eventually ripen at a 1:1 ratio for BEANs. Sometimes additional BEANs can be earned from “sown”, or staked tokens. According to the whitepaper: “We define the Weather as the percentage of additional Beans ultimately harvested from 1 Sown (BEAN). Beanstalk changes the Weather at the beginning of each Season according to the peg maintenance mechanism.”

BEAN owners can also use the coin as a governance token. Its whitepaper continued: “Beanstalk requires the ability to coordinate protocol upgrades. Members earn passive yield from participation in governance of Beanstalk upgrades.”

Tough beginnings

The Beanstalk network went live in August and it has not been smooth growth for the stablecoin. According to another blog post, BEAN was the victim of a pump and dump scheme just six weeks after launching.

BEAN reached a high of $4 and a low of $0.24 in mid-September. This was incredibly volatile for a coin that was intended to stay at $1.

By the end of October, BEAN had managed to stabilise around the $1 mark. The same post said: “The community that has grown around Beanstalk over the past month, their genuine interest in making Beans the ubiquitous stablecoin of DeFi, and insights into how to give Beanstalk the best opportunity to make that happen is cause for excitement.”

The stablecoin network also laid out an updated roadmap for the next steps of its journey. These included a focus on DeFi and introducing layer-2 integration in 2022.

The flash attack

Beanstalk was rocked by an even greater scandal more recently on 17 April 2022. It suffered an attack that saw millions of dollars stolen from the liquidity pools. An anonymous attacker borrowed cryptocurrency worth $80m and deposited it into the network to gain voting rights. They then had enough power to transfer the contents of Beanstalk's Silo, or funds, to themselves, according to The Guardian.

The Guardian and The Verge reported that $182m had been stolen. However, Beanstalk has said assets worth $76m had been stolen, with the rest of the BEANS in the exploiter contract having been burned.

Even so, the funds are still yet to be recovered. Beanstalk has offered a “whitehat bounty”, where the attacker will be paid 10% if they return the remaining 90% of the stolen funds.

The future of the network has been thrown into question by the attack. According to Etherscan, BEAN is trading at $0.04, as of 20 April. This is far below the $1 value that Beanstalk promises its investors. However, this price drop has not been recognised by CoinMarketCap.

The future of BEAN

Experts are reluctant to commit to giving a Beanstalk crypto price prediction, as so much of the network’s future is up in the air. Glen Allsopp, marketing expert at Nomics.com, said BEAN would have “a much higher chance” of returning to its $1 peg if the exploiter accepts the bounty.

The chief executive and founder of Interlock, Rick Deacon, says BEAN’s network is at risk. He argued: “If that [whitehat bounty] doesn’t work, because Beanstalk doesn’t appear to have VC backing a rescue seems unlikely, putting its future in question.”

The co-founders of Beanstalk recognised this as well in a recent Discord message. One of the BEAN developers wrote: “We are fucked. This project has not had any venture backing, so it is highly unlikely there is any sort of bailout coming.”

Jake Moore, global cyber security adviser at ESET, said the next step forward for BEAN was to regain trust. He said Beanstalk would need to be honest over the path forward, giving investors a clear idea of the necessary next steps.

It is possible for networks to recover from attacks, as Axie Infinity and Wormhole did. But Ronghui Gu, co-founder and chief executive of CertiK, said it would be tougher for BEAN, because of the "grassroots" kind of movement Beanstalk undertook.

“Overall, when you do have a hack of this size the biggest challenge is gaining the trust of the community back is not just hard, but crucial,” Gu said.

Beanstalk price prediction

Most price predictions have not recognized that BEAN has plummeted in value since the exploit. It also seems Beanstalk coin price predictions have not taken into account its stablecoin goal.

WalletInvestor says the current price of BEAN is $0.99 and will stay roughly at this level for the next year. Its Beanstalk price prediction for 2022 says it will end the year at $0.96. A gradual fall is estimated by the forecaster, its Beanstalk price prediction for 2025 says it will fluctuate around the $0.80 mark.

Priceprediction says BEAN will climb back to its $1 mark this year and average out at $1.35. However, its Beanstalk price prediction for 2030 says it will continue growing and race to an unlikely $29.80.

The theft has cut down some of Beanstalk’s ambitions, and now the network’s very existence is at risk. Allsopp said: “Right now it's too early to predict their future, but recovering some of the funds or raising capital to restart the project will undoubtedly be their top priority.”

FAQs

How many Beanstalk are there?

According to Etherscan, there is a maximum supply of 71 million BEAN.

Is Beanstalk a good investment?

Beanstalk have attempted to build the next generation of stablecoins using credit instead of reserves. Yet its network has recently been victim to a massive attack, stealing funds worth $76m. Cryptocurrencies present risks, so investors should conduct thorough due diligence.

Will Beanstalk go up?

It depends. Currently, BEAN is struggling to get back to its $1 peg. Glen Allsopp says BEAN’s best chance is if the attacker will accept the Whitehat bounty and return 90% of the funds.

Should I invest in Beanstalk?

Beanstalk is trying to innovate the stablecoin industry with its use of credit to stabalize its BEAN coin. But the network has seen its funds drain in a recent attack. Investors should always be wary of cryptocurrencies and carry out thorough research.

Further reading

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