QUADRIGA INITIATIVE
CRYPTO WATCHDOG & FRAUD RECOVERY PLATFORM
A COMMUNITY-BASED, NOT-FOR-PROFIT
$542 000 USD
JUNE 2025
GLOBAL
SILO FINANCE
DESCRIPTION OF EVENTS
Silo is a non-custodial crypto bank offering high-yield, risk-isolated money markets for lending and borrowing any crypto asset. Its design centers around security, transparency, and flexibility, allowing users to lend with confidence by choosing specific isolated markets that align with their risk profile. Lenders benefit from compounded interest, protocol rewards, and the ability to borrow against their deposits to maximize yield. Borrowers, in turn, gain access to efficient borrowing tools with minimized costs and customizable risk control, including features like non-borrowable collateral settings.
Silo Vaults allow liquidity providers to earn fees and incentives across all Silo markets through a unified interface. The platform supports yield optimization by allowing users to manage market whitelisting and liquidity allocations. For developers, Silo offers a programmable infrastructure via the Silo Hooks Stack, enabling custom deployment of lending markets with adjustable parameters such as interest rates, oracles, and LTV ratios. These tools make it easier to build tailored money markets on a secure, audited, and formally verified codebase.
Security is a core focus of Silo, backed by audits from firms like Certora and Sigma Prime, formal verification, and live event monitoring through partners like Hypernative. The platform also features a $350,000 bug bounty program and adheres to the Safe Harbor Agreement for responsible disclosure. The SILO token has evolved into xSILO, enhancing its utility across chains like Ethereum, Avalanche, Arbitrum, and Sonic. xSILO enables users to earn protocol fees, auto-compound rewards, and actively participate in governance through liquidity gauges.
Silo experienced an exploit targeting an unreleased leverage smart contract deployed on Ethereum mainnet and Sonic. This contract was still in a pre-release testing phase and was entirely separate from the core Silo protocol, including its isolated markets and vaults. During internal testing, the contract was used to open a leveraged position, at which point an attacker manipulated inputs to execute unauthorized borrowing. While 224 ETH belonging to SiloDAO was lost, no user funds were compromised, and the attack had no impact on the main protocol, which remains secure and operational.
The vulnerability stemmed from how the leverage contract handled external swap calls. Users participating in testing had granted high borrowing approvals to the leverage contract. The attacker took advantage of this by submitting malicious _swapArgs—data meant to facilitate token swaps but instead encoded a direct call to the silo.borrow() function. By substituting swap instructions with crafted calldata, the attacker redirected borrowed funds to their own wallet while making it appear as if the victim users initiated the borrow. The key flaw was a blind external call in the contract: (bool success, bytes memory data) = swapArgs.exchangeProxy.call(swapArgs.swapCallData); which executed arbitrary logic without validation.
The attacker set swapArgs.exchangeProxy to a legitimate Silo market (WETHSilo) and encoded swapCallData to invoke silo.borrow() with the victim as the borrower and themselves as the receiver. Because the leverage contract already had borrowing rights from the victim via approvals, the borrow operation succeeded. The exploit was effective due to a lack of verification in how _swapArgs was parsed and executed. In response, Silo immediately paused the affected contracts, initiated a security review, and is working with Certora for renewed audits and formal verification. Going forward, Silo commits to ensuring all contracts undergo at least two security audits before any public deployment.
The losses are reported to be 224 ETH. These were funds that belonged to SiloDAO, and not to the general public or other users of the platform.
Following the exploit, the Silo Finance team responded quickly by pausing the affected unreleased leverage contract on both Ethereum mainnet and Sonic to prevent further abuse. They confirmed that the core Silo protocol, including isolated markets and vaults, remained secure and unaffected. The team launched a full code review to identify and patch the vulnerability, and they engaged Certora to conduct another round of audits and apply formal verification to the contract.
The core Silo protocol remained secure and fully operational, and the compromised contract was promptly paused. The team initiated a thorough audit process and strengthened their security procedures to prevent similar incidents in the future.
Silo reinforced its security protocols, committing to at least two audits for all future public releases, and began working with authorities and tracing teams to recover the stolen funds.
No user funds were lost. There is no indication that any funds were recovered by the platform.
The Silo team is continuing a comprehensive review of the exploited leverage contract to identify any additional vulnerabilities and prevent future exploits. They are working closely with Certora to conduct new audits and apply formal verification before considering a public release of the leverage feature. Efforts to recover the stolen 224 ETH are ongoing, involving collaboration with tracing teams and authorities. The team is also reinforcing internal protocols and updating their security practices to ensure all future deployments meet enhanced audit and testing standards.
Silo is a non-custodial crypto bank that offers high-yield, risk-isolated money markets for lending and borrowing any crypto asset, with a strong focus on security, transparency, and flexibility. While the core protocol remains secure and fully operational, an unreleased leverage contract in testing was exploited, resulting in the loss of 224 ETH belonging to SiloDAO. The exploit stemmed from a vulnerability in how the contract handled external swap calls, allowing an attacker to misuse user approvals and redirect borrowed funds. In response, the Silo team promptly paused the affected contracts, initiated a full security review, and partnered with Certora for additional audits and formal verification. Recovery efforts for the stolen funds are ongoing, and Silo has reinforced its development practices, committing to at least two audits for all future contract releases.
Post Mortem: Unreleased leverage contract exploited - Silo Labs (Jul 21)
Silo Labs Attack Transaction - Etherscan (Jul 21)
Silo Finance Homepage (Jul 21)
