Deus rekt machina.

An unexpected plot twist saw Deus DAO users liquidated via a flash loan attack on the recently launched DEI lending contract, with the attacker making ~$3M profit.

Five months have passed since we last reported a flash loan attack, but they used to be commonplace.

Is DeFi growing stronger?

A flash loan attack was used to manipulate the balance of the Solidex USDC/DEI pool, which is used as an oracle for collateral value on Deus Finance’s $DEI lending contract.

This resulted in user positions becoming insolvent, which the hacker’s contract liquidated, before repaying the flash loan.

Credit: Peckshield

1: Flashloan 9,739342 DEI via SPIRIT-LP_USDC_DEI

2: Flashloan 24,772,798 DEI out of the sAMM-USDC/DEI pair (used as price oracle to calculate collateral value)

3: Liquidate the users who become insolvent from Step 2

4: Repay the borrowed 24,772,798 DEI to the sAMM-USDC/DEI pair

5: Burn the liquidated LP token to get 5,218,173 USDC + 5,246,603 DEI

6: Swap 5,218,173 USDC to 5,170,594 DEI

7: Repay flashloan with 3,001,552 DEI as hack profit

Attack tx:


The attacker then went on to send 3M USDC via Multichain from an FTM address to ETH address, and from there 1.1k ETH and 200k DAI to Tornado cash, totalling ~$3M gained.

The project’s token, DEUS, dropped ~40% in the hour following the attack and, despite some recovery, remains volatile.

Deus have announced that they will be reimbursing affected users who return their DEI debts, returning their liquidated collateral.

Flash loan season taught even non-technical users about the importance of price oracles.

Security standards emerged from our baptism of fire, and the industry learned and moved forward.

We know that these attacks can be mitigated by using decentralised or TWAP oracles.

Why didn’t Deus DAO have a more robust system in place?

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