Lodestar Finance Collateral Price Manipulation: Difference between revisions

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(Created page with "{{Imported Case Study|source=https://www.quadrigainitiative.com/casestudy/lodestarfinancecollateralpricemanipulation.php}} {{Unattributed Sources}} thumb|Lodestar FinanceLodestar Finance is a decentralized borrowing and lending protocol designed for the Arbitrum community. The platform allows users to earn interest on their assets by supplying them to the protocol and collateralizing their deposits. The protocol is based on Compound and has...")
 
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[[File:Lodestarfinance.jpg|thumb|Lodestar Finance]]Lodestar Finance is a decentralized borrowing and lending protocol designed for the Arbitrum community. The platform allows users to earn interest on their assets by supplying them to the protocol and collateralizing their deposits. The protocol is based on Compound and has made modifications to support Arbitrum, DPX, MAGIC, and plvGLP. It relies on Chainlink Oracles for accurate pricing, except for plvGLP. Recently, Lodestar fell victim to an attack where an attacker manipulated the plvGLP price reported by the GLPOracle contract, resulting in the draining of the lending pools and a profit of approximately $6.5 million. The incident caused a significant drop in the token price and total value locked (TVL). As of now, no plans for reparations have been announced.
[[File:Lodestarfinance.jpg|thumb|Lodestar Finance]]Lodestar Finance is a decentralized borrowing and lending protocol designed for the Arbitrum community. The platform allows users to earn interest on their assets by supplying them to the protocol and collateralizing their deposits. The protocol is based on Compound and has made modifications to support Arbitrum, DPX, MAGIC, and plvGLP. It relies on Chainlink Oracles for accurate pricing, except for plvGLP. Recently, Lodestar fell victim to an attack where an attacker manipulated the plvGLP price reported by the GLPOracle contract, resulting in the draining of the lending pools and a profit of approximately $6.5 million. The incident caused a significant drop in the token price and total value locked (TVL). As of now, no plans for reparations have been announced.


This is a global/international case not involving a specific country.<ref name="rektnews-10904" /><ref name="lodestarfinancetwitter-10905" /><ref name="lodestarfinancedocs-10906" /><ref name="solidityfinancetwitter-10907" /><ref name="certik-10908" /><ref name="arbiscan-10909" /><ref name="arbiscan-10910" /><ref name="lodestarfinance-10911" /><ref name="lodestarfinancedocs-10912" />
This is a global/international case not involving a specific country.<ref name="rektnews-10904" /><ref name="lodestarfinancetwitter-10905" /><ref name="lodestarfinancedocs-10906" /><ref name="solidityfinancetwitter-10907" />


== About Lodestar Finance ==
== About Lodestar Finance ==
"Lodestar Finance is an algorithmic borrowing and lending protocol that is aiming to bring the critical DeFi primitive of decentralized money markets to Arbitrum communities." "Lodestar brings the critical DeFi primitive of decentralized money markets to Arbitrum cryptocurrencies like MAGIC, DPX, and plvGLP."
Lodestar Finance is an algorithmic borrowing and lending protocol focused on decentralized money markets in Arbitrum communities. It aims to provide decentralized lending services to emerging communities like Treasure, Dopex, and Plutus, benefiting token holders and DAOs. The platform allows users to earn interest by supplying assets like MAGIC, DPX, and plvGLP to the protocol and collateralizing their deposits. It enables borrowing of crypto assets, access to liquidity without triggering taxable events, and leveraged trading strategies. Lodestar plans to partner with more communities as the Arbitrum ecosystem evolves, aiming to support layer 2 native communities that lack access to critical DeFi infrastructure. One of its collateral assets is plvGLP, which represents locked GLP from Plutus DAO. Built as a Compound fork, Lodestar has added code to support changes, including Arbitrum integration, support for DPX, MAGIC, and plvGLP, modifications to interest models, and other adjustments<ref name="lodestarfinance-10911" /><ref name="lodestarfinancedocs-10912" />.
 
"The mission of Lodestar Finance is to bring decentralized lending services to blossoming Arbitrum communities like Treasure, Dopex, and Plutus to create new value for token holders and DAOs."
 
"Earn interest on Arbitrum assets like MAGIC, DPX, and plvGLP by supplying them to the protocol. Collateralize your deposit, which enables the ability to borrow crypto assets. Access liquidity without creating a taxable event. Employ leveraged trading strategies (long and short positions) by utilizing the borrowing functionalities of the protocol. Unlock the liquidity of yield bearing assets such as plvGLP without sacrificing the underlying yield."
 
"As the Arbitrum ecosystem continues to develop, we will be on the lookout for more communities to partner with and create value for layer 2 native communities that lack access to critical DeFi infrastructure."
 
"Among Lodestar’s collateral assets is the yield-bearing plvGLP, representing GLP locked in Plutus DAO’s vault."
 
"Lodestar is a Compound fork at the core, and Compound has some of the most battle-tested contracts in all of DeFi. We have added code to support a few changes we have made, namely adding Arbitrum support, DPX, MAGIC and plvGLP support, tweaking some Interest Models, and a few other small changes."


== The Reality ==
"The Lodestar docs state that:"
"The Lodestar docs state that:"
"we are relying on Chainlink Oracles for accurate pricing (with the exception of plvGLP)"
"we are relying on Chainlink Oracles for accurate pricing (with the exception of plvGLP)"
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"343 ETH ($430k) necessary for the attack was bridged from Polygon three months ago."
"343 ETH ($430k) necessary for the attack was bridged from Polygon three months ago."


"Using flash loans, the attacker manipulated the plvGLP price reported by Lodestar’s GLPOracle contract, allowing them to “borrow” all the funds supplied on the platform." "[T]he attacker [drained] their lending pools for a profit of ~$6.5M."
"Solidity Finance summarised the root cause: The GLPOracle did not properly take into account the impact of a user calling donate() on the GlpDepositor contract, which inflates the assets of the GlpDepositor contract, and therefore the oracle-delivered price of the plvGLP token."
"The incident saw the token LODE dump by ~70% and TVL drop to just $11."
"Following the exploit, the funds were swapped to ETH, bridged back to mainnet and dispersed to multiple addresses."
"two days have now passed since the initial attack on Lodestar, and no mention of any planned reparations has yet been made."
This is a global/international case not involving a specific country.
The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.
Include:
* Known history of when and how the service was started.
* What problems does the company or service claim to solve?
* What marketing materials were used by the firm or business?
* Audits performed, and excerpts that may have been included.
* Business registration documents shown (fake or legitimate).
* How were people recruited to participate?
* Public warnings and announcements prior to the event.
Don't Include:
* Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
* Anything that wasn't reasonably knowable at the time of the event.
There could be more than one section here. If the same platform is involved with multiple incidents, then it can be linked to a main article page.
== The Reality ==
This sections is included if a case involved deception or information that was unknown at the time. Examples include:
This sections is included if a case involved deception or information that was unknown at the time. Examples include:


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!Description
!Description
|-
|-
|May 5th, 2023 4:42:58 PM MDT
|December 10th, 2022 9:43:26 AM MST
|First Event
|Exploit Transaction
|Describe the event.
|One of the exploit transactions on the blockchain<ref name="arbiscan-10910" />. TBD further analysis.
|-
|December 11th, 2022 1:24:00 AM MST
|CertiK Incident Report
|<ref name="certik-10908" /><ref>[https://twitter.com/CertiKAlert/status/1601855328366346242 CertiKAlert - "Lending platform @LodestarFinance was attacked resulting in a ~$6.5m profit for the exploiter. The team has set interest rates to 0 so that supply and borrow balances will not move." - Twitter] (May 5, 2023)</ref>. TBD
|}
|}


== Technical Details ==
== Technical Details ==
This section includes specific detailed technical analysis of any security breaches which happened. What specific software vulnerabilities contributed to the problem and how were they exploited?
This section includes specific detailed technical analysis of any security breaches which happened. What specific software vulnerabilities contributed to the problem and how were they exploited?
Exploiter Address:<ref name="arbiscan-10909" />
"Using flash loans, the attacker manipulated the plvGLP price reported by Lodestar’s GLPOracle contract, allowing them to “borrow” all the funds supplied on the platform." "[T]he attacker [drained] their lending pools for a profit of ~$6.5M."
"Solidity Finance summarised the root cause: The GLPOracle did not properly take into account the impact of a user calling donate() on the GlpDepositor contract, which inflates the assets of the GlpDepositor contract, and therefore the oracle-delivered price of the plvGLP token."


== Total Amount Lost ==
== Total Amount Lost ==
Exploiter Address:<ref name="arbiscan-10909" />
The total amount lost has been estimated at $6,500,000 USD.
The total amount lost has been estimated at $6,500,000 USD.


Line 86: Line 59:
== Immediate Reactions ==
== Immediate Reactions ==
How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?
How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?
"The incident saw the token LODE dump by ~70% and TVL drop to just $11."
"Following the exploit, the funds were swapped to ETH, bridged back to mainnet and dispersed to multiple addresses."


== Ultimate Outcome ==
== Ultimate Outcome ==
What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?
What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?
"two days have now passed since the initial attack on Lodestar, and no mention of any planned reparations has yet been made."


== Total Amount Recovered ==
== Total Amount Recovered ==
Line 94: Line 73:


What funds were recovered? What funds were reimbursed for those affected users?
What funds were recovered? What funds were reimbursed for those affected users?
"two days have now passed since the initial attack on Lodestar, and no mention of any planned reparations has yet been made."


== Ongoing Developments ==
== Ongoing Developments ==
Line 113: Line 94:


== References ==
== References ==
<references><ref name="rektnews-10904">[https://rekt.news/lodestar-rekt/ Rekt - Lodestar Finance - REKT] (May 5, 2023)</ref>
<references>
 
<ref name="rektnews-10904">[https://rekt.news/lodestar-rekt/ Rekt - Lodestar Finance - REKT] (May 5, 2023)</ref>
<ref name="lodestarfinancetwitter-10905">[https://twitter.com/lodestarfinance/status/1601686921566375936 @lodestarfinance Twitter] (May 5, 2023)</ref>
<ref name="lodestarfinancetwitter-10905">[https://twitter.com/lodestarfinance/status/1601686921566375936 @lodestarfinance Twitter] (May 5, 2023)</ref>
<ref name="lodestarfinancedocs-10906">[https://docs.lodestarfinance.io/documentation/security Security - Docs] (May 5, 2023)</ref>
<ref name="lodestarfinancedocs-10906">[https://docs.lodestarfinance.io/documentation/security Security - Docs] (May 5, 2023)</ref>
<ref name="solidityfinancetwitter-10907">[https://twitter.com/SolidityFinance/status/1601684153740963840 @SolidityFinance Twitter] (May 5, 2023)</ref>
<ref name="solidityfinancetwitter-10907">[https://twitter.com/SolidityFinance/status/1601684153740963840 @SolidityFinance Twitter] (May 5, 2023)</ref>
 
<ref name="certik-10908">[https://www.certik.com/resources/blog/TqTyq4vYHl8JzS7zyJye9-lodestar-finance-incident-analysis Lodestar Finance Incident Analysis  - CertiK Blog - Web3 Security Leaderboard] (May 5, 2023)</ref>
<ref name="certik-10908">[https://www.certik.com/resources/blog/TqTyq4vYHl8JzS7zyJye9-lodestar-finance-incident-analysis Lodestar Finance Incident Analysis  - Blog - Web3 Security Leaderboard] (May 5, 2023)</ref>
<ref name="arbiscan-10909">[https://arbiscan.io/address/0xc29d94386ff784006ff8461c170d1953cc9e2b5c Lodestar Exploiter Address - Arbiscan] (May 5, 2023)</ref>
 
<ref name="arbiscan-10910">[https://arbiscan.io/tx/0xc523c6307b025ebd9aef155ba792d1ba18d5d83f97c7a846f267d3d9a3004e8c Arbitrum Exploit Transaction - Arbiscan] (May 5, 2023)</ref>
<ref name="arbiscan-10909">[https://arbiscan.io/address/0xc29d94386ff784006ff8461c170d1953cc9e2b5c Lodestar Exploiter | Address 0xc29d94386ff784006ff8461c170d1953cc9e2b5c | Arbiscan] (May 5, 2023)</ref>
 
<ref name="arbiscan-10910">[https://arbiscan.io/tx/0xc523c6307b025ebd9aef155ba792d1ba18d5d83f97c7a846f267d3d9a3004e8c Arbitrum Transaction Hash (Txhash) Details | Arbiscan] (May 5, 2023)</ref>
 
<ref name="lodestarfinance-10911">[https://www.lodestarfinance.io/ Lodestar Finance] (May 5, 2023)</ref>
<ref name="lodestarfinance-10911">[https://www.lodestarfinance.io/ Lodestar Finance] (May 5, 2023)</ref>
 
<ref name="lodestarfinancedocs-10912">[https://docs.lodestarfinance.io/ Lodestar Finance - Docs] (May 5, 2023)</ref>
<ref name="lodestarfinancedocs-10912">[https://docs.lodestarfinance.io/ Lodestar Finance - Docs] (May 5, 2023)</ref></references>
</references>

Revision as of 18:14, 5 May 2023

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Lodestar Finance

Lodestar Finance is a decentralized borrowing and lending protocol designed for the Arbitrum community. The platform allows users to earn interest on their assets by supplying them to the protocol and collateralizing their deposits. The protocol is based on Compound and has made modifications to support Arbitrum, DPX, MAGIC, and plvGLP. It relies on Chainlink Oracles for accurate pricing, except for plvGLP. Recently, Lodestar fell victim to an attack where an attacker manipulated the plvGLP price reported by the GLPOracle contract, resulting in the draining of the lending pools and a profit of approximately $6.5 million. The incident caused a significant drop in the token price and total value locked (TVL). As of now, no plans for reparations have been announced.

This is a global/international case not involving a specific country.[1][2][3][4]

About Lodestar Finance

Lodestar Finance is an algorithmic borrowing and lending protocol focused on decentralized money markets in Arbitrum communities. It aims to provide decentralized lending services to emerging communities like Treasure, Dopex, and Plutus, benefiting token holders and DAOs. The platform allows users to earn interest by supplying assets like MAGIC, DPX, and plvGLP to the protocol and collateralizing their deposits. It enables borrowing of crypto assets, access to liquidity without triggering taxable events, and leveraged trading strategies. Lodestar plans to partner with more communities as the Arbitrum ecosystem evolves, aiming to support layer 2 native communities that lack access to critical DeFi infrastructure. One of its collateral assets is plvGLP, which represents locked GLP from Plutus DAO. Built as a Compound fork, Lodestar has added code to support changes, including Arbitrum integration, support for DPX, MAGIC, and plvGLP, modifications to interest models, and other adjustments[5][6].

The Reality

"The Lodestar docs state that:" "we are relying on Chainlink Oracles for accurate pricing (with the exception of plvGLP)"

"Manipulating the price of collateral has been a popular attack technique since the beginning of DeFi, but especially in recent times, as this incident follows the attacks on both Mango and Moola Markets, who lost $115M, and $8.4M respectively, in October."

"343 ETH ($430k) necessary for the attack was bridged from Polygon three months ago."

This sections is included if a case involved deception or information that was unknown at the time. Examples include:

  • When the service was actually started (if different than the "official story").
  • Who actually ran a service and their own personal history.
  • How the service was structured behind the scenes. (For example, there was no "trading bot".)
  • Details of what audits reported and how vulnerabilities were missed during auditing.

What Happened

The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.

Key Event Timeline - Lodestar Finance Collateral Price Manipulation
Date Event Description
December 10th, 2022 9:43:26 AM MST Exploit Transaction One of the exploit transactions on the blockchain[7]. TBD further analysis.
December 11th, 2022 1:24:00 AM MST CertiK Incident Report [8][9]. TBD

Technical Details

This section includes specific detailed technical analysis of any security breaches which happened. What specific software vulnerabilities contributed to the problem and how were they exploited?

Exploiter Address:[10]

"Using flash loans, the attacker manipulated the plvGLP price reported by Lodestar’s GLPOracle contract, allowing them to “borrow” all the funds supplied on the platform." "[T]he attacker [drained] their lending pools for a profit of ~$6.5M."

"Solidity Finance summarised the root cause: The GLPOracle did not properly take into account the impact of a user calling donate() on the GlpDepositor contract, which inflates the assets of the GlpDepositor contract, and therefore the oracle-delivered price of the plvGLP token."

Total Amount Lost

Exploiter Address:[10]

The total amount lost has been estimated at $6,500,000 USD.

How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?

Immediate Reactions

How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?

"The incident saw the token LODE dump by ~70% and TVL drop to just $11."

"Following the exploit, the funds were swapped to ETH, bridged back to mainnet and dispersed to multiple addresses."

Ultimate Outcome

What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?

"two days have now passed since the initial attack on Lodestar, and no mention of any planned reparations has yet been made."

Total Amount Recovered

There do not appear to have been any funds recovered in this case.

What funds were recovered? What funds were reimbursed for those affected users?

"two days have now passed since the initial attack on Lodestar, and no mention of any planned reparations has yet been made."

Ongoing Developments

What parts of this case are still remaining to be concluded?

Individual Prevention Policies

No specific policies for individual prevention have yet been identified in this case.

For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.

Platform Prevention Policies

Policies for platforms to take to prevent this situation have not yet been selected in this case.

For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.

Regulatory Prevention Policies

No specific regulatory policies have yet been identified in this case.

For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.

References

  1. ↑ Rekt - Lodestar Finance - REKT (May 5, 2023)
  2. ↑ @lodestarfinance Twitter (May 5, 2023)
  3. ↑ Security - Docs (May 5, 2023)
  4. ↑ @SolidityFinance Twitter (May 5, 2023)
  5. ↑ Lodestar Finance (May 5, 2023)
  6. ↑ Lodestar Finance - Docs (May 5, 2023)
  7. ↑ Arbitrum Exploit Transaction - Arbiscan (May 5, 2023)
  8. ↑ Lodestar Finance Incident Analysis - CertiK Blog - Web3 Security Leaderboard (May 5, 2023)
  9. ↑ CertiKAlert - "Lending platform @LodestarFinance was attacked resulting in a ~$6.5m profit for the exploiter. The team has set interest rates to 0 so that supply and borrow balances will not move." - Twitter (May 5, 2023)
  10. ↑ 10.0 10.1 Lodestar Exploiter Address - Arbiscan (May 5, 2023)
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