Incident Overview
On December 17, 2025, Yearn Finance's legacy v1 iEarn TUSD vault suffered a flash loan exploit resulting in approximately $307,000 loss ($245K in TUSD and $55K in 3Crv tokens), with the attacker converting stolen funds to 103 ETH.
The attacker utilized flash loans from Aave V1/V2 and dYdX, withdrawing $203,491 worth of TUSD from Aave Protocol V1, $4,068 worth of USDC from dYdX, and a flash loan of $245,906 worth of TUSD from Aave Protocol V2. The vault's configuration flaw calculated share prices using only the sUSD balance deposited in a Fulcrum sUSD vault strategy, opening the door to "donation attacks" where an attacker transfers assets directly into a vault to distort accounting metrics. The stolen funds moved quickly across Curve and Yearn Finance, swapping four different tokens and shifting millions in stablecoins including $30 million from Morpho, $10 million from Yearn, and $11 million through Curve's DAI/USDC pool, with the attacker paying minimal fees of just $611 in Ethereum and 0.01 ETH ($29.60).
The immutable nature of the contract meant security analysts who warned about the vulnerability before the exploit could not prevent it, as the contract cannot be patched or paused once deployed.
Incident Report
Market Context at Time of Hack
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 Yearn Finance, these are the critical security checks that could have prevented this incident (December 2025).
- Verify all logic paths related to misconfigured Fulcrum sUSD strategy / 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.
Free TrialSecurity Audit History
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Related Attack Classes
The technique used in this hack maps to these vulnerability classes in our security curriculum:
Sources & References
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