Just two months after shedding $15.6 million in a worth oracle manipulation exploit, Inverse Finance has once more been hit with a flashloan exploit that noticed the attackers make off with $1.26 million in Tether (USDT) and Wrapped Bitcoin (WBTC).
Inverse Finance is an Ethereum based mostly decentralized finance (DeFi) protocol and a flashloan is a sort of crypto mortgage that’s normally borrowed and returned inside a single transaction. Oracles report exterior pricing info.
The newest exploit labored by utilizing a flashloan to govern the worth oracle for a liquidity supplier (LP) token utilized by the protocol’s cash market software. This allowed the attacker to borrow a bigger quantity of the protocol’s stablecoin DOLA than the quantity of collateral they posted, letting them pocket the distinction.
The assault comes simply over two months after an analogous April 2 exploit which noticed attackers artificially manipulate collateralized token costs by means of a worth oracle to empty funds utilizing the inflated costs.
In response to the assault, Inverse Finance quickly paused borrowing and eliminated its DOLA stablecoin from the cash market whereas it investigated the incident, saying no person funds had been in danger.
Inverse has quickly paused borrows following an incident this morning the place DOLA was faraway from our cash market, Frontier. We are investigating the incident nevertheless no person funds had been taken or had been in danger. We are investigating and can present extra particulars quickly.
— Inverse (@InverseFinance) June 16, 2022
It later confirmed that solely the attacker’s deposited collateral was affected within the incident and solely incurred a debt to itself because of the stolen DOLA. It inspired the attacker to return the funds in return for a “beneficiant bounty”.
In whole, the attacker’s gained 99,976 USDT and 53.2 WBTC from the assault, swapping them to ETH earlier than sending all of it by means of the cryptocurrency mixer Tornado Cash, trying to obfuscate the ill-gotten features.
DeFi market Deus Finance suffered from an analogous exploit in March, with attackers manipulating a worth pairing inside an oracle resulting in a achieve of 200,000 Dai (DAI) and 1101.8 ETH price over $3 million on the time.
Beanstalk Farms, a credit score based mostly stablecoin protocol misplaced all $182 million price of collateral in a flash mortgage assault brought on by two malicious governance proposals which ultimately drained all funds from the protocol.
How the newest assault went down
Blockchain safety agency BlockSec analyzed that the attacker borrowed 27,000 WBTC in a flashloan swapping a small quantity to the LP token used to publish collateral in Inverse Finance so customers can borrow crypto belongings.
The remaining WBTC was swapped to USDT, inflicting the value of the attacker’s collateralized LP token to rise considerably within the eyes of the value oracle. With the worth of those LP tokens now price much more because of the worth rise, the attacker borrowed a bigger quantity than normal of the DOLA stablecoin.
The worth of the DOLA was price far more than the deposited collateral, so the attacker swapped the DOLA to USDT, and the sooner WBTC to USDT swap was reversed to repay the unique flashloan.