New Gold Protocol, a recently launched DeFi staking project, lost $2 million in a flash loan exploit that targeted vulnerabilities in its smart contract code.

The attack occurred shortly after the protocol’s launch, with hackers using flash loans to manipulate asset prices and drain funds from the platform’s liquidity pools.

Flash loans allow instant, unsecured borrowing that must be repaid within the same blockchain transaction, making them a popular but risky DeFi tool.

The exploit appears to have targeted flaws in the protocol’s transfer logic, the programmed rules that govern how tokens move between users and pools.