A flaw in the technology allowed the hacker to withdraw money from the Ethereum and Optimism vaults at Arcadia, amounting to about $455,000.
Arcadia Finance suffered a loss of over $455k after a hacker took advantage of a flaw in the noncustodial DeFi protocol. This incident emphasizes the dangers of coding flaws in the decentralized finance industry.
A blockchain investigator named PeckShield informed Arcadia Finance of the hack and blamed it on the protocol’s lack of untrusted input validation. The hacker was able to take advantage of the weakness and steal money from the Ethereum and Optimism vaults because there was no validation mechanism in place.
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Arcadia Finance immediately suspended the impacted contracts after learning of the hack from PeckShield in order to stop future money losses. The protocol responded right away to the problem and safeguarded its consumers.
Related: Optimism set to unlock $587M worth of OP tokens, will investors unload?
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Experts are now looking at the abused code and vulnerability as part of the investigation into the incident. Another bug in Arcadia’s code that PeckShield found poses a serious risk if it is exploited. Due to the absence of reentrancy protection, internal vault health checks may be bypassed due to this vulnerability.
Around 180 Ether, or the majority of the stolen money, came from Optimism. Through Tornado Cash, the hacker tried to hide the stolen money. However, the suspected wallet address still contains the stolen Ethereum tokens, which are worth more than $103,000.
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Over $300 million was lost as a result of numerous breaches and attacks in the crypto realm during the second quarter of 2023. An estimated 212 security incidents were recorded by the blockchain security firm CertiK during the quarter, resulting in a loss of $313,566,528 from Web3 protocols.
The second quarter of the previous year saw a 58% increase in cryptocurrency hacks, according to CertiK’s research. The BNB Smart Chain had the most problems, with 119 instances totaling losses of $70,711,385 in total.
Related: Crypto Hacks, Rug Pulls, and Scams Cost Investors $656M in H1 2023
A reminder of the value of strong security measures in decentralized finance protocols comes from the Arcadia Finance attack. To safeguard user funds and uphold ecosystem confidence, protocols must emphasize code audits, vulnerability analyses, and preventive security measures as the DeFi market expands.