Drop your email to read the BlockApex newsletter and keep yourself updated around the clock.
Table Of Content
Rari capital got hacked for around $79M through a classic re-entrancy attack. Rari is a fork of compound finance that had this bug fixed earlier. It is not the first time Rari has been a victim of a hack.
Rari is a fork of compound finance & compound had a known issue of re-entrancy attack whenever CTokens were borrowed through borrow() function.
This was patched by the Rari team by introducing a pool-wide re-entrancy guard on CTokens.
There also exists a component called “comptroller” which is responsible for functions such as providing & withdrawing collateral by calling enterMarkets() & exitMarket respectively.
The comptroller contract did not have re-entrancy checks in place. The attacker exploited through the exitMarket() function which makes the deposited asset no longer a collateral meaning it can be withdrawn at any time.
The pool triggers the fallback function of the exploiter contract while sending ether to the exploit contract where the attacker makes a re-entrant call to exitMarket() & withdraws his collateral of 80,000 WSTETH.
The attacker receives 2397ETH for free & transfers it to another contract for later claiming.
The attacker repeats steps 1-4 until all borrowed amount is collected.
The attacker applies the same strategy on 7 different pools & runs away with ~$79M of profit.
The Deus DAO hack had significant financial consequences, with users collectively losing around $6.5 million across Arbitrum, BSC, and Ethereum chains. Furthermore, the hack caused the DEI stablecoin to depeg by more than 80%, destabilizing its value and potentially shaking investor confidence.
From an outsider’s perspective, returning millions of dollars worth of funds after successfully pulling off a complicated exploit is, at best, admirable, and at worst, foolish. What could be the motivation behind such a decision?