Multiple protocols bit by the Vyper.
The total drained from the affected pools reached $69M (nice) and came from a number of protocols who use Curve for liquidity of their ETH-pegged assets:
JPEG’D lost $11.5M from the pETH/ETH pool
Alchemix lost $20.5M from the alETH/ETH pool but were able to save $11.5M
And Curve itself lost $24.2M from the CRV/ETH pool, $5.4M of which was also frontrun by 0xc0ffeebabe, who quickly returned the funds.
The tweet was deleted once it became clear that the problem ran deeper…
…were more pools at risk?
Other pools are safe.
Would this bloody Sunday ever end?
However, the exploited contracts were not external projects using Curve pools as a price feed, but the Curve pools themselves…
The root cause was in fact a 0-day compiler bug in certain older versions of Vyper, the language Curve’s contracts are written in.
A misalignment of storage slots between two functions (add_liquidity and remove_liquidity) causes a malfunction in the nonreentrant guard. This allows the attacker/s to re-enter the transaction between these two functions in order to manipulated LP token prices and drain the pool.
Any pool containing native ETH and written in versions 0.2.15, 0.2.16 and 0.3.0 was vulnerable.
The bug has been exploitable since 2021, and was patched (seemingly by accident, given no protective actions were taken) in version 0.3.1.
Attacker’s addresses and attack transactions:
Metronome (whitehat frontrunner): 0xc0ffeebabe5d496b2dde509f9fa189c25cf29671
Despite not being able to find a workable exploit, Curve has advised users to withdraw from the Tricrypto pool on Arbitrum out of caution.
But many were frustrated at the perceived irresponsible disclosure of the vulnerability (specifically the at-risk version numbers) while efforts were still on-going.
Clout farming should take a back-seat when every second counts.
As banteg put it:
you 👏 don't 👏 tweet 👏 live 👏 vulns 👏 before 👏 they 👏 are 👏 fully 👏 mitigated
The losses have been heavy, but the fallout could be worse…
Many of the associated tokens took a beating: JPEG (initially -45%, since settled around -20%), pETH (initially -85%, then settled at around -40%), ALCX (down <10%), alETH (roughly -20%), CRV currently -15% but dropped to $0.60 at lowest point.
And CRV is the one to watch…
The potential impact of such a large amount of CRV being dumped onto the open market (which the hacker still hasn’t done so far…) caused worries due to the highly-leveraged position of the protocol’s founder Michael Ergorov.
In a fittingly degen manner, Ergorov has borrowed a total of $107.2M of stablecoins against $284M of CRV collateral across a variety of DeFi lending protocols. But with such a large quantity of CRV hanging in the balance, a liquidation cascade could cause much larger problems than yesterday’s hacks.
For the sake of the whole sector let’s hope his good luck continues…
While Curve has made clear that the other protocols were not at fault, it’s hard to know where the blame does ultimately lie.
Compiler-level vulnerabilities come as a chilling surprise to all involved.
Situations like these, which at times seemed to present an existential threat to a key piece of DeFi infrastructure, present an opportunity to break from business as usual and reprioritise.
One of the most valuable innovations of our system is the transparency which allows us to dissect incidents like these in an open conversation, in stark contrast to TradFi.
The tools underlying our industry require just as much attention as the protocols they are used to build. With the majority of attention on Solidity, this vulnerability in Vyper snuck under the radar for years before being exploited.
But the incentives are skewed…
Auditing projects can be good money, but generally takes for granted the stability of the underlying language. And with no token for VCs to dump on retail the base layer can often get forgotten about.
This hack took a different approach to most. Not content with ripping off protocols for a million or so going after the same read-only reentrancy, the attacker/s targeted a deeper layer to find a way in.
That kind of dedication and attention to detail sounds like a certain state-sponsored hacking group…
Or perhaps this time the bug was discovered by accident; it’s hard to imagine such a deeply buried vulnerability being painstakingly researched only to get frontrun on execution.
Either way, this still offers an opportunity to change direction.
Given some of the larger protocols in the space have money to burn, and even more to lose, hiring in-house specialists to work on maintain and research could be money well spent.
But while money remains attracted to our casino solely by the promise of moonshots, investment in the most basic level of infrastructure will likely continue to be lacking.
Will we learn this time?
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