The non-custodial decentralized finance (DeFi) protocol, Arcadia Finance, is the latest victim of a $455,000 exploit that took place on the Ethereum and Optimism networks. In confirming the hack, Arcadia revealed that it was working with security partners to minimize damage after the contracts were suspended.
The platform also involved law enforcement to resolve the issue.
- Blockchain security expert PeckShield was the first to announce the Arcadia attack and MANILA that this was caused by “lack of reliable input validation,” which was exploited to drain funds from the darcWETH and darcUSDC vaults.
- The company highlighted another weakness in the DeFi protocol – “lack of reentrancy protection” – which allows quick liquidations to bypass internal vault health checks.
- The stolen funds from the Optimism network share were laundered by the controversial coin mixer, Tornado Cash. But the Ethereum portion of the stolen funds, worth more than $103,000, continues to remain parked at the flagged wallet address.
- Arcadia has not yet confirmed the validity of the root cause identified by PeckShield, but said the investigation is ongoing. The latest protocol statement read,
“We will continue to work with our security partners, law enforcement, and the wider community to resolve this as best we can. Our number one priority is to recover funds for users of the protocol in Arcadia.
- Arcadia is a non-custodial, permissionless protocol launched by Ethereum and Optimism in March of this year. The platform allows users to trade on the spot with leverage and raise staked ether.
- The above is the latest exploit among the widespread hacks recorded in the digital asset sector.
- In the first of 2023 only, the Web3 security firm Beosin RECOGNIZED a loss of $470 million in 108 attacks on the DeFi protocol.
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