ZKSync-based Era Lend suffers $3.4 million loss in DeFi exploit

TL;DR Breakdown

  • Era Lend, a lending protocol on the zkSync network, suffered a $3.4 million loss due to a ‘read-only reentrancy attack’, which allowed the attacker to withdraw funds repeatedly.
  • The attack also impacted the stablecoin USDC+, issued by the Overnight Finance protocol, resulting in a potential loss of over $261,000.
  • In response, Era Lend paused its zkSync contracts to prevent further exploits, highlighting the ongoing security challenges in the DeFi sector.

Description

According to a recent report by blockchain security firm BlockSec, Era Lend, a decentralized lending protocol operating on the zkSync Layer 2 network, has fallen victim to a ‘read-only reentrancy attack’ resulting in a loss of $3.4 million.  The attacker exploited a vulnerability that allowed repeated calls to a function within a single transaction, withdrawing … Read more

According to a recent report by blockchain security firm BlockSec, Era Lend, a decentralized lending protocol operating on the zkSync Layer 2 network, has fallen victim to a ‘read-only reentrancy attack’ resulting in a loss of $3.4 million. 

The attacker exploited a vulnerability that allowed repeated calls to a function within a single transaction, withdrawing more funds than they were entitled to. Also, the exploit involved manipulating a contract to report outdated values that hadn’t been updated yet, taking advantage of a faulty price oracle that Era Lend relied upon.

The impact and response

The attack had repercussions on the stablecoin USDC+, issued by the Overnight Finance protocol, resulting in a potential loss of over $261,000, which represents 7.86% of the total value of the collateral supporting the stablecoin. 

In response to the attack, Era Lend paused the protocol’s zkSync contracts to prevent further exploits. The team also advised users that only the USDC pool was compromised. According to an official statement on Discord, the Era Lend team assured that the security of other assets remains intact—but borrowing operations on the platform have been temporarily halted.

“We have detected and confirmed a cyber attack on our platform. We want to assure you that the attack has been contained, and the threat actor can no longer continue their actions.”

Era Lend Team

The Era Lend exploit has raised concerns for other projects based on the Syncswap project, from which Era Lend is a fork. Security analysts have warned that these projects might also be susceptible to similar exploits. The incident underscores the need for auditors to utilize specialized software to identify these vulnerabilities more effectively, as read-only reentrancy attacks can evade traditional scrutiny and remain harder to identify during auditing processes.

Era Lend operates on the zkSync network, an Ethereum layer-2 rollup utilizing zero-knowledge proofs. As of April, the total value locked in the zkSync network surpassed $110 million. Despite the recent exploit, the network’s developers have ambitious plans to establish an ecosystem of interoperable chains named “Hyperchains” by December 2023.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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