Cryptocurrency project Rodeo Finance has apparently been the victim of an oracle manipulation attack on Tuesday. The perpetrator escaped with about 810 Ethereum ($1.5 million) on the Arbitrum network, the latest in a series of decentralized finance (DeFi) exploits. Here are the details…
Hacking attack for cryptocurrency project
Blockchain security firm PeckShield, which first identified the incident, conducted further analysis of on-chain data. The analysis shows that the attacker transferred his ill-gotten gains from Arbitrum to Ethereum. They then traded the stolen tokens for various other assets before converting them back into ether. In the final stage of the exploit, it effectively obscured the trace of the funds by diverting them through Tornado Cash, a popular transaction mixer on the Ethereum network.
Wintermute’s director of research, Igor Igamberdiev, described the attack on The Block as “TWAP oracle manipulation.” In the world of DeFi, TWAP or Time Weighted Average Price acts as an oracle to calculate the average price of an asset over a given time period. This method is often used to reduce the effects of short spikes in price fluctuations.
The price of cryptos has been manipulated
DeFi hackers manipulate TWAP oracles by artificially distorting the calculated average price of an asset to gain an unfair advantage during a transaction. This kind of manipulation paves the way for various types of attacks. Flash credit exploits are one of them. In this type of exploit, the attacker borrows a large amount of a particular asset, devalues it through TWAP oracle manipulation, and then artificially buys more than the depreciated price. After repaying the loan, the attacker retains the excess and thus profits from an elaborate manipulation plan.
As the Rodeo Finance example shows, complex maneuvers like these have become a tool for hackers manipulating oracle price data streams over the past few years. Rodeo abuse is not an isolated incident, but part of a trend that has plagued the Arbitrum ecosystem for the past few months. cryptocoin.com As we reported, in April, Sentiment, another DeFi protocol running on Arbitrum, lost $1 million to a hacker. A larger security breach followed in May with $7.5 million on the Jimbos protocol.
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