Moola Market - REKT

Lending protocol Moola Market is the latest to fall victim to a “highly profitable trading strategy”, and the first CELO protocol on the leaderboard (#63).

Similarly to last week’s Mango Markets case, the exploit was carried out via price manipulation of a collateral asset, this time netting the attacker $8.4M.

The Moola team announced the incident on Twitter, appealing to the CEX-funded attacker to return funds in exchange for a bounty.

Fortunately, just six hours later, over 90% of the funds were returned to the Moola multisig, with the exploiter keeping ~$525k as a bounty, of which $37k was donated to charity…

A guilty conscience or a planned whitehat?

Credit: FrankResearcher

This attack was a simple price manipulation which didn’t require any coding.

Using initial funding of 243k CELO (~$180k), the attacker supplied 60k CELO in order to borrow 1.8M of the protocol’s native token, MOO, which could itself be used as collateral to borrow against other assets.

Then, using the remaining CELO to buy MOO on Ubeswap, the attacker pumped the price of their MOO collateral…

…allowing them to borrow the remaining assets on the protocol, draining all liquidity:

  • 8.8M CELO ($6.5M)

  • 765k cEUR ($0.7M)

  • 1.8M MOO ($0.6M)

  • 644k cUSD ($0.6M)

Attacker's address: 0x95b5579b323ddc6cd290bd4da6e56ba019588efc

In addition to returning the majority of the funds, the whitehat also donated 50k CELO ($37k) of the bounty to Impact Market, a protocol focused on providing UBI for vulnerable families in developing countries.

Bear markets offer easy opportunities to market manipulators, who find it easier to move prices when liquidity is low. Especially when smaller protocols allow use of their native tokens as collateral, whose dollar value dies away as the bear drags on.

Moola Markets have learned their lesson, and are proposing to remove MOO as a viable collateral asset via protocol governance.

But anyone with deep enough pockets can stress test DeFi markets in their current state.

Who will be next?

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