How much was lost in the Cauldron hack?

The Cauldron hack resulted in $370K in losses on September 06, 2022.

What attack technique was used in the Cauldron exploit?

The Cauldron exploit utilized Flash Loan Attack. 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.

Cauldron Hack

TOTAL LOST $370K

Low Sep 06, 2022 Flash Loan Attack

Affected Chain 2022 Incident surface

Recovered - No recovery reported

All-Time Rank #1089 By amount stolen

Protocol Type Dexs Target category

Incident Overview

Quick Summary

The biggest flash loan attack on Avalanche in 2022 was detected. The attacker took 370,000 $USD after interacting with several assets.

Details of the Exploit

The attacker interacted with Cauldron, Aave, JoeSwap, and Curve for various purposes. The attacker used a malicious smart contract with an unverified source code to withdraw 998,000 $nxUSD using LP tokens worth 500,000 $USDC. The full attack flow of the exploit transaction succeeded as follows:

1. The attackers malicious contract flashloaned 51,000,000 $USDC from Aave

2. 280,000 $USDC were swapped to $WAVAX with JoeSwap

3. liquidity was added using claimed $WAVAX and 260,000 $USDC so 0.0045 JoeLPToken was received

4. The remaining 50,460,000 $USDC were swapped for $WAVAX on JoeSwap and it changed the reserve of the pool

5. The attackers contract called the updateExchangeRate function on the CauldronV2 smart contract, which changed the ExchangeRate variable according to the previous JoeSwap pool's reserve amount

6. The attackers contract deposited 0.0045 JoeLPToken to the CauldronV2 and 998,000 $nxUSD were withdrawn from DegenBox. Because of the manipulated ExchangeRate variable, the attacker was able to take that amount for 500,000 $USD worth JoeLPTokens

7. The remaining $WAVAX were swapped back for 50,426,896 $USDC on the previous JoeSwap pool

8. Consequently, Curve.fi and other pools were used to swap 998,000 $nxUSD for 970,010 $USDC

9. The 51,025,500 $USDC for the flash loan were paid back to Aave

10. The profit amounted to 371,406 $USDC and were transferred to an EOA address.

Block Data Reference

CauldronV2 vulnerable contract:

https://snowtrace.io/address/0xe767c6c3…c4c060

Exploit transaction:

https://snowtrace.io/tx/0x0ab12913…54c026

Attacker address:

https://snowtrace.io/address/0x69992a2e…a0b1af

Attacker smart contract:

https://snowtrace.io/address/0x16b94c63…6e49d6

DegenBox contract:

https://snowtrace.io/address/0x0b1f9c22…59b775

Stolen funds sent to:

https://snowtrace.io/address/0x8ec74e6f…378381

This is classified as a Flash Loans Attacks . Compare similar hacks →

Incident Report

Protocol / Project Cauldron

Date of Incident September 06, 2022

Attack Technique Flash Loan Attack

Classification Borrowing and Lending

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

Protocol Information

Protocol Type Dexs

Official Website cauldron.quest/

Protocol Twitter/X @cauldronswap

Team Anonymous

Source Code Verified On-Chain

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 flash loan attack and Solidity and EVM internals

Capital Required Flash loan capital (borrowed atomically, zero upfront cost)

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

Protocol Analysis Identification of the exploitable vulnerability in Cauldron's contract logic - root cause: borrowing and lending

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 Flash Loan Attack vulnerabilities in code review

If you're auditing a protocol with similar architecture to Cauldron, these are the critical security checks that could have prevented this incident (September 2022).

Verify all logic paths related to Flash Loan Attack are guarded by proper access controls and input validation - see the Flash Loans Attacks attack class for patterns
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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Related Attack Classes

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

See all Flash Loans Attacks examples →

Flash Loans Attacks

Sources & References

01
Source 1 https://archive.is/TiUzv
02
Source 2 https://archive.is/Rt3Up

Threat Assessment

Severity Level

LOW

Attack Vector Flash Loan Attack
Root Cause Borrowing and Lending
Year 2022

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