ParaSpace Lending V1 Hack

TOTAL LOST $5.0M
Medium Borrow Logic Exploit ethereum

Summarize with AI

ChatGPT Perplexity Claude Grok
Affected Chain ethereum Incident surface
Recovered - No recovery reported
All-Time Rank #425 By amount stolen
Auditors 1 Prior security audit

Incident Overview

ParaSpace is a permissionless universal, cross-margin NFT lending protocol that enables users to collateralize both ERC-721 and ERC-20 assets into a single portfolio to borrow against.

Incident Report

Protocol / Project ParaSpace Lending V1
Date of Incident
Affected Chain(s) ethereum
Attack Technique Borrow Logic Exploit
Classification Protocol Logic
Primary Source View Post-Mortem

Protocol Information

Protocol Type Lending
Smart Contract Language Solidity
Official Website parallel.fi/
Protocol Twitter/X @ParallelFi_HQ

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 borrow logic exploit and Solidity and EVM internals
Capital Required Seed capital to cover gas and initial position setup
On-Chain Access Ability to interact with ethereum smart contracts and deploy a custom exploit contract
Protocol Analysis Identification of the exploitable vulnerability in ParaSpace Lending V1's contract logic - root cause: protocol logic
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? Likely — with a thorough Borrow Logic Exploit audit checklist and test coverage
Audited by Audit Report 1 — still lost $5.0M. Prior audits don't guarantee safety, especially after post-audit code changes.

If you're auditing a protocol with similar architecture to ParaSpace Lending V1, these are the critical security checks that could have prevented this incident (March 2023).

  • Verify all logic paths related to Borrow Logic Exploit are guarded by proper access controls and input validation
  • 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

Proof-of-Concept Exploits

1 PoC available
poc-exploits - paraspace lending v1
$ ParaSpace NFT Flashloan + scaledBalanceOf Manipulation

On-Chain Evidence & References

Sources & References

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