Sonne Finance Hack

Reported loss $20.0M
Optimism
Donation attack, exchange-rate inflation, and precision loss in an empty market

What happened

Sonne Finance on Optimism lost approximately $20 million through a known Compound V2 donation attack after a permissionless timelock window exposed a newly created, empty market before its intended initialization safeguards ran.

Technical root cause

A permissionless timelock execution path exposed a new empty Compound V2-style market before Sonne's initialization controls could run. Direct donations inflated totalCash without corresponding share supply, and redeemUnderlying rounded required shares down, enabling withdrawal with too few shares.

How it happened

When a two-day timelock expired, the attacker executed queued market-creation and collateral-factor transactions, leaving the new VELO market exploitable. They donated borrowed VELO to an almost empty soVELO market without minting shares, inflating its exchange rate while total supply stayed at 2 wei.

Rounding in redeemUnderlying then allowed a large VELO redemption for only 1 wei of soVELO. The attacker borrowed against the inflated collateral and repeated against other markets. Flash liquidity aided execution, but the core flaw was empty-market share inflation and precision loss.

Protocol details

Classification Borrowing and lending / token and share accounting
Protocol Type Lending
Implementation language Solidity
Protocol links Website @SonneFinance
Attacker Address 0x5d0d99e9886581ff8fcb01f35804317f5ed80bbb
Exploit Transaction 0x9312ae377d7ebdf3c7…b53e42b7f0

Evidence

Proof of concept

1 available

Sources

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