Funds are not safe – The ecosystem of decentralized finance (DeFi) has experienced significant growth and counts several thousand protocols. In practice, the code of most of these protocols has been copied from other protocols. Unfortunately, some developers inadvertently introduce vulnerabilities by copying and modifying protocol code and put users’ funds at risk. This is what the Fuse protocol managed by Rari Capital learned during its hack this weekend.
Rari Capital’s Fuse: an $80 million hack
fuse is a decentralized finance protocolEthereum developped by Rari Capital. This offers a decentralized loan and savings service. In practice, Fuse is nothing but a Compound protocol code fork to which changes have been made.
Saturday April 30, the teams of BlockSeca company specializing in blockchain analysis, announced that they have detected an attack targeting the Fuse protocol. At the time of announcement, the loot amounts to 80 million dollars.
Subsequently, several Internet users were concerned about the vulnerability of the Fuse instance deployed on Arbitrum. Although Rari’s teams said “no Arbitrum pool is vulnerable”, these were quickly exploited. In total, 100ETHor $290,000 were removed by the attacker on Arbitrum.
In total, the attacker stole 9 different assets, namely:
- ETH 6,037;
- 20,251,603 EIF;
- 14,278,990 ISPs;
- $1,948,952;
- USDC 10,055,556;
- USDT132,959;
- IAR 31,615;
- 13 101 364 FRAX;
- US$2,765,891.
At the same time, this attack also violently impacted the Fei protocol, the origin of the eponymous stablecoin. Indeed, the protocol operated a pool on the Fuse market.
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Course of the attack
Once is not custom, the attacker has not reinvented the wheel. Thus, the latter exploited a so-called flaw of reentry. This type of flaw occurs when a function can call another function without having finalized its execution.
In the case of Fuse, the function exitMarket() allows you to withdraw funds deposited as collateral. However, it does not make the necessary checks to ensure that the borrowed funds have been returned.
Therefore, the attacker was able to carry out his attack in 4 steps:
- The striker took out a flash loan of 150,000,000 USDC and 50,000 WETH;
- He deposited 150,000,000 USDC as collateral on Fuse;
- Taken out a loan of 1,977 ETH using the previous collateral;
- Like the function borrow() does not directly register the use of the collateral for the loan, the attacker could directly call the function exitMarket() allowing him to recover his collateral, while keeping the borrowed funds;
These steps were then repeated on Fuse pools 8, 18, 27, 127, 144, 146, and 156. Once the pools were siphoned off, the striker repaid his flash loan and proceeded to send his funds over the Tornado Cash protocol in an attempt to launder them.
A hope of restitution of the funds?
Unlike many attackers, the Fuse Protocol attacker did not send all of the funds via Tornado Cash. Indeed, the latter only sent $15 million on the Tornado Cash protocol.
Soon, several rumors emerged that he would be willing to return some of the funds in exchange for a generous $15 million bug bounty reward.
On his side, Rari Capital offered a $10 million reward to the attacker. Now we just have to wait for his response.
Unfortunately for Fuse, the attacker was smarter than that of the Zeed protocol. In effect, protocol attacker Zeed forgot to collect his loot before destroying the contract used in the attack. Result of the races, 1 million dollars blocked forever.
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