The decentralized derivatives protocol based on Fantom, DEUS Finance suffered a flash loan attack on Thursday, with the attacker making off with about $13.4 million.
According to on-chain data, the anonymous hacker carried out the assault using a flash loan at around 2:40 AM UTC. Flash loan assaults involve attackers borrowing funds with a requirement that the borrowed sum be returned in the same transaction. These are made possible with smart contracts.
While flash loans are meant for arbitrage trading and enhancing capital efficiency, attackers have abused them to manipulate DeFi price data feeds — known as oracles — and carry out attacks.
The Deus hacker took a flash loan to manipulate the price oracle within one of its liquidity pools on Fantom, involving a token called DEI paired against the USDC stablecoin, security analysts at PeckShield explained in a post. The flash-loan assisted manipulation surged DEI's price and the inflated value was then used as collateral to borrow additional capital, within the same flash loan transaction.
This additional borrowed capital was sold for USDC stablecoin, after which the hacker repaid the flash loan — netting about $13.4 million. The perpetrator then transferred the exploited funds from Fantom to Ethereum, where they routed them via Tornado Cash, a mixing protocol used to obfuscate Ethereum transactions.
This wasn't the first security incident for Deus Finance.
Last month, the protocol lost $3 million to a flash loan exploit. The community was disappointed that the protocol had been hacked again in the same way. While the community waits for an official reaction, calls have been made to Circle to freeze the $USDC implicated in the incident.
Flash loan attacks have become one of the most popular ways hackers target DeFi platforms.
Earlier this month, hackers stole $11.2 million worth of Binance Coin from the DeFi platform Elephant Money. Cream Finance was hit with three different flash loan attacks in 2021, costing the DeFi platform $130 million in October, $37 million in February, and another $29 million in August.
Last year, hackers stole at least $2.2 billion from DeFi protocols, Blockchain analysis firm Chainalysis said. Earlier this year in March, the Ronin Network announced that hackers stole more than $500 million worth of cryptocurrency, making it one of the largest attacks ever.
