Wise Lending, a Web3 lending app and yield aggregator, suffered a significant loss of 170 Ether (worth approximately $440,000 at current prices) in an apparent flash loan exploit on January 12. This attack, identified by multiple security experts, marks another concerning event in the decentralized finance (DeFi) space.
The exploit involved the use of an unverified contract, with an address ending in d82c, to drain the funds. Various tokens were transferred into this contract, including $9,000 in USD Coin (USDC), $2,000 in Tether (USDT), $5,000 in Dai (DAI), 18.51 Wrapped Ether (WETH), and several Pendle Finance associated tokens.
The attacker initiated the exploit by borrowing 1,110 Lido Staked Ether (stETH) tokens (valued at $2.9 million) from the Aave lending protocol. Flash loans like this are often utilized to manipulate oracle prices in DeFi exploits.
Pseudonymous blockchain security researcher Spreek first alerted the crypto community about the attack via X (formerly Twitter). Spreek speculated that the vulnerability might have been associated with a new Pendle Finance derivative token. Officer’s Notes, another security researcher, shared the post, commenting on the exploit's prevalence in the industry. The vulnerability may have been caused by a 7% price swing between stETH and ETH within a particular pool, due to an AAVE v2 stETH flash loan.
The incident at Wise Lending adds to a worrying trend in the DeFi sector. In 2024 alone, decentralized finance protocols have already lost at least $5 million through exploits. This includes the $4.5 million hit on Radiant Capital on January 3 and over $400,000 lost by Gamma Protocol the following day.
In 2023, over $1.8 billion was lost from crypto hacks, scams, and exploits, according to blockchain security platform Certik. The Wise Lending exploit underscores the ongoing security challenges faced by DeFi platforms and the importance of robust security measures in the increasingly targeted crypto industry.
Disclaimer: Please note that the information provided in this article is based on the referenced research articles. It is essential to conduct further research and analysis before making any investment decisions. The cryptocurrency market is highly volatile, and investors should exercise caution and consult with financial professionals before engaging in cryptocurrency trading or investment activities.