$37 500 000 USD





"Alpha Finance Lab is an ecosystem of DeFi products that will interoperate to maximize returns while minimizing risks for users. Alpha products focus on capturing unaddressed demand in DeFi in an innovative and user friendly way." "In the morning of February 13, 2021, the Alpha Finance DeFi project was hacked. By exploiting a vulnerability in the Alpha Homora v2 contract, the attacker was able to extract $37.5 million from the project." "Alpha Homora was audited by Quantstamp and PeckShield, both of them skilled and respectable firms."


"This exploit is complicated, involving more than 9 transactions." "The attacker used Alpha Homora to borrow and lend repeatedly with Iron Bank, which allows for leveraged lending." "A few missing input checks in very specialized conditions allowed the hacker to abuse Alpha Homora’s privilege of borrowing an unlimited amount of funds from Cream Finance’s Iron Bank." "In the first stage of the attack, the attacker borrowed 1,000e18 sUSD from HomoraBankv2" ", exploiting a rounding error in the protocol." "By repeatedly borrowing sUSD from Alpha Homora and loaning it to Iron Bank, the attacker is able to build up a hoard of cySUSD." "The exploit involved the use of CREAM Finance's Iron Bank service, which gives out uncollateralized loans to trusted smart contracts." The "exploiter coded a contract that tricked Alpha Homora into believing it is their own contract. The exploiter then used this privileged access to trick CREAM Finance into lending out $37.5M worth of ETH and stablecoins." "At the end of the day, the Alpha Homora attacker was able to make approximately $37.5 million by exploiting the vulnerable contract."


"In the wake of the attack, the Alpha Finance team has resolved these issues and limited buying and repayment to four tokens (ETH, DAI, USDC, and USDT). These corrections are designed to prevent a similar attack from occurring in the future." "[W]e have closed the loophole that made the exploit possible." "Rather than pay off the sUSD debt, the attacker used Tornado Cash – an Ethereum privacy mixer – to make off with the funds." "We are investigating with the relevant parties and will investigate with the authorities to trace the attacker." "No user funds were lost, and Alpha and CREAM teams are working on how to heal the debt between the protocols. The loophole that made the exploit possible has been closed, and the project is going through peer review and another security audit ––Alpha Homora V2 had been audited by Quantstamp and Peckshield." "[S]ome have speculated that Alpha will print tokens to cover the loss." "[T]he incident triggered yet another discussion of why auditors failed to catch the bug, whether they are properly incentivized, and how this situation can be mitigated."

Luckily, users of the Alpha Homora platform did not end up losing their funds in this exploit. However, the Alpha Finance platform owes the Cream Finance platform a repayment of the funds which were lent out on their behalf.


It's just another example of how "security audits" are a failed model and it's impossible to detect all possible exploits.


Transactions such as those involved in this exploit would be seen as highly suspicious to any human platform operator, and storing funds offline is the only truly secure method of protection.


Check Our Framework For Safe Secure Exchange Platforms

Sources And Further Reading

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