Incident Overview
Terra's Mirror Protocol was exploited for ~$2 million. This exploit was made possible through validators' usage of outdated oracle software.
The Mirror Protocol was a synthetic assets protocol that allowed users to deposit $USTC or $LUNAC with a lockup period in order to mint synthetic stocks and commodities. It is noteworthy that the new Terra Network was launched within days after the collapse of the Terra Classic Network. The protocol suffered an exploit in the amount of $2 million caused by outdated oracle price feeds. The price feeds used the price of the new Luna Coin instead of the LunaC. While the new Luna coin was trading at a price around 5$ at the time, the $LUNAC coin was practically worthless at a price point of fractions of a cent. This meant that for $1k in $LUNC an attacker could deposit $1,3 million in deposit and borrow against it.
Due to this mechanism, attackers drained several pools on the platform.
Example Transaction: https://finder.terra.money/classic/tx/F830681D8FEACC4DA67E84D40C49F0FF805609F2BB5CCC39A0EFE66257F2D791
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 Mirror Protocol, these are the critical security checks that could have prevented this incident (May 2022).
- Verify all logic paths related to 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
Learn to Prevent the Next Mirror Protocol
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