Lodestar Finance Collateral Price Manipulation
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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.
| 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
- ↑ Rekt - Lodestar Finance - REKT (May 5, 2023)
- ↑ @lodestarfinance Twitter (May 5, 2023)
- ↑ Security - Docs (May 5, 2023)
- ↑ @SolidityFinance Twitter (May 5, 2023)
- ↑ Lodestar Finance (May 5, 2023)
- ↑ Lodestar Finance - Docs (May 5, 2023)
- ↑ Arbitrum Exploit Transaction - Arbiscan (May 5, 2023)
- ↑ Lodestar Finance Incident Analysis - CertiK Blog - Web3 Security Leaderboard (May 5, 2023)
- ↑ 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)
- ↑ 10.0 10.1 Lodestar Exploiter Address - Arbiscan (May 5, 2023)