How much was lost in the Arcadia Finance hack?

The Arcadia Finance hack resulted in $459K in losses on July 07, 2023.

What attack technique was used in the Arcadia Finance exploit?

The Arcadia Finance exploit utilized Reentrancy. Understanding this attack vector is critical for smart contract auditors and developers building secure DeFi protocols.

How can developers prevent similar smart contract attacks?

Preventing smart contract hacks requires a combination of secure coding practices, thorough security audits, and understanding common attack vectors like reentrancy, oracle manipulation, and access control flaws. Smart Contract Hacking (SCH) provides hands-on training to help developers and auditors identify and prevent vulnerabilities before deployment.

Arcadia Finance Hack

TOTAL LOST $459K

Low Jul 07, 2023 Reentrancy

Affected Chain 2023 Incident surface

Recovered - No recovery reported

All-Time Rank #1037 By amount stolen

Auditors 1 Prior security audit

Incident Overview

Quick Summary

Arcadia Finance, a decentralized trading platform, was exploited through reentrancy on both Ethereum and Optimism, losing 459,094 $USD.

Details of the Exploit

Arcadia Finance, a DEX on Ethereum and Optimism chain was exploited due to a code vulnerability leading to the loss of funds on both Ethereum and Optimism chains. The hacker utilized a loophole in the code which lacked proper validation of untrusted input, draining assets from Ethereum (darcWETH) and Optimism (darcUSDC) vaults. The exploit resulted in a loss of 459,094 $USD in total, of which 159.22 $ETH and 162,627 $USDC were lost.

103,200 $USDC and 11 $ETH were lost from the Ethereum chain, while 59,427 $USDC and 148.22 $ETH were lost from the Optimism chain. Funds on the Ethereum chain were swapped for $ETH and $DAI and remained at the attacker's address, while the Optimism chain funds were swapped for $ETH and then bridged through Stargate Finance.

Block Data Reference

Ethereum:

Attacker Address:

https://etherscan.io/address/0x5c75e94d…3c050d

Malicious Transaction:

https://etherscan.io/tx/0xefc4ac01…c2d651

Malicious Contract:

https://etherscan.io/address/0x56a35fae…1517cf

Optimism:

Attacker Address:

https://optimistic.etherscan.io/address/0xd3641c91…1a9467

Malicious Transaction:

https://optimistic.etherscan.io/tx/0xca7c1a0f…7a0afe

Malicious Contract:

https://optimistic.etherscan.io/address/0x01a4d908…3b83c6

Bridging Transaction:

https://optimistic.etherscan.io/tx/0x856c92df…6000da

This is classified as a Reentrancy . Compare similar hacks →

Incident Report

Protocol / Project Arcadia Finance

Date of Incident July 07, 2023

Attack Technique Reentrancy

Classification Exchange (DEX)

Primary Source View Post-Mortem #1 View Post-Mortem #2 View Post-Mortem #3 View Post-Mortem #4

Protocol Information

Protocol Type Leveraged Farming

Affected Token ARCADIA

Official Website arcadia.finance/

Protocol Twitter/X @ArcadiaFi

Team Anonymous

Source Code Verified On-Chain

Market Context at Time of Hack

Token Categories

Avalanche Ecosystem

Protocol Links

GitHub Discord

What the Attacker Needed to Succeed

Understanding the prerequisites for this type of attack helps auditors identify protocols that are most at risk and helps developers build better defenses.

Technical Knowledge Deep understanding of reentrancy and Solidity and EVM internals

Capital Required Seed capital to cover gas and initial position setup

On-Chain Access Ability to interact with smart contracts and deploy a custom exploit contract

Protocol Analysis Identification of the exploitable vulnerability in Arcadia Finance's contract logic - root cause: exchange (dex)

Execution Speed Precise transaction ordering and timing to exploit the vulnerability within a single atomic block

Obfuscation Plan A strategy to launder and move stolen funds - typically through mixers, cross-chain bridges, or decentralized DEX swaps to resist tracing

What Auditors Should Check

Could this have been caught in audit? Yes — skilled auditors routinely flag Reentrancy vulnerabilities in code review

Audited by Audit Report 1 — still lost $459K. Prior audits don't guarantee safety, especially after post-audit code changes.

If you're auditing a protocol with similar architecture to Arcadia Finance, these are the critical security checks that could have prevented this incident (July 2023).

Verify all logic paths related to Reentrancy are guarded by proper access controls and input validation - see the Reentrancy attack class for patterns
Check that all state-changing functions follow the Checks-Effects-Interactions (CEI) pattern to prevent reentrancy and logic ordering bugs
Review privileged functions (owner, admin, governance) for potential abuse vectors - centralization risks should be documented and bounded with timelocks or multi-sigs

Master these auditing techniques with hands-on labs and real exploit scenarios in the Smart Contract Hacking course.

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Security Audit History

Audit Report 1 Report

Related Attack Classes

The technique used in this hack maps to these vulnerability classes in our security curriculum:

See all Reentrancy examples →

Reentrancy

Sources & References

01
Source 1 https://cointelegraph.com/news/arcadia-finance-hacked-on-ethereu…
02
Source 2 https://twitter.com/PeckShieldAlert/status/1678248292327763968
03
Source 3 https://twitter.com/ArcadiaFi/status/1678285634727706625
04
Source 4 https://twitter.com/ArcadiaFi/status/1678310473832312833

Threat Assessment

Severity Level

LOW

Attack Vector Reentrancy
Root Cause Exchange (DEX)
Year 2023

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