How these two DeFi protocols fell prey to $11 million ‘reentrancy attack’

On 15 March, an attacker siphoned over $11 million from two DeFi platforms, Agave and Hundred Finance. It gave the impression to be a flash mortgage ‘reentrancy assault’ on each protocols on the Gnosis chain as per investigation. Likewise, the platforms halted their contracts to forestall additional harm.

Assessing the harm 

Solidity developer and creator of an NFT liquidity protocol app, Shegen selected to focus on the hack in a sequence of tweets on 16 March. Surprisingly, this evaluation got here after the aforementioned entity misplaced $225,000 in the identical exploit.

Her preliminary investigations revealed the assault labored by exploiting a wETH contract operate on Gnosis Chain. It allowed the attacker to proceed borrowing crypto earlier than the apps might calculate the debt, which might forestall additional borrowing. Ergo, the perpetrator carried the stated exploit by borrowing towards the identical collateral they posted till the funds drained from the protocols.

To make issues worse, the funds weren’t protected. ‘They’re just about gone eternally, however there’s nonetheless hope,’ she added. That stated, the founding father of Gnosis, Martin Koppelmann did tweet to usher in some certainity amidst the chaos. Koppelmann asserted,

After some additional analysis, the attacker allegedly deployed this contract with 3 features; In blocks 21120283 and 21120284, the hacker used the contract to work together with the affected protocol, Agave immediately. The sensible contract on Agave was basically the identical as Aave, which secured $18.4B.

As there was no reported exploit in AAVE, how might Agave be drained? Effectively, right here’s a summary of the way it was utilized in an unsafe means “unintentionally”.

The stated hacker was capable of borrow greater than their collateral in agave. Thereby, strolling away with all borrowable belongings.

Supply: Twitter

The borrowed belongings comprised of two,728.9 WETH, 243,423 USDC, 24,563 LINK, 16.76 WBTC, 8,400 GNO, and 347,787 WXDAI. General, the hacker made off with roughly $11 million.

Nonetheless, Shegen didn’t blame the Agave builders for failing to stop the assault. She stated, the builders ran a safe and protected AAVE-based code. Though used with unsafe tokens, in an unsafe means.

“All DeFi protocols on GC ought to swap out present bridged tokens for brand new ones,” she concluded.

Blockchain safety researcher Mudit Gupta reiterated an identical trigger behind the exploit.

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