Incident Overview
Inverse Finance was exploited due to price manipulation, resulting in a loss of approximately $14.5M in assets.
Inverse Finance, a DeFi platform, was exploited due to the manipulation of the 'external price oracle'. The attacker purchased INV tokens and manipulated the price to overestimate its value. This allowed the attacker to borrow 1588 ETH, 94 WBTC, 3999669 DOLA, and 39 YFI, which significantly exceeded their initial INV investment.
The attacker deployed a malicious smart contract and used SushiSwap and Curve.fi to manipulate the price. Due to the small liquidity of SushiSwap on the INV/ETH pair, an exchange for 300 ETH was enough to change the price of the INV token. The attacker then deposited the funds in INV received at the preparation stage and minted 1746 XINV tokens.
With the rise in the price of XINV, the attacker was able to borrow assets using the minted XINV tokens.
Exploiter Addresses:
https://etherscan.io/address/0x8b4c1083…8351b3
https://etherscan.io/address/0x117c0391…9ea7e9
Malicious Contract Address:
https://etherscan.io/address/0xea0c959b…aa1562
Malicious Transaction:
https://etherscan.io/tx/0x20a6dcff…cd8365
Incident Report
Protocol Information
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.
What Auditors Should Check
If you're auditing a protocol with similar architecture to Inverse Finance Frontier, these are the critical security checks that could have prevented this incident (April 2022).
- Verify all logic paths related to Price Oracle Attack / Oracle Issue are guarded by proper access controls and input validation - see the Oracle Manipulation & Price Manipulation attack class for patterns
- Audit oracle price feeds for manipulation risks - ensure time-weighted average prices (TWAPs) or multi-source aggregators are used, not spot prices
- 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.
Free TrialRelated Attack Classes
The technique used in this hack maps to these vulnerability classes in our security curriculum:
Sources & References
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