Avalanche-based Nereus Finance Suffers Flash Loan Attack

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The decentralized blockchain protocol Avalanche is the latest victim of exploitation. It suffered a targeted flash loan attack of about $370,000 worth of USD Coin (USDC) on Nereus Finance, a lending protocol built on the Avalanche Network.

The announcement was made in a tweet by the blockchain security company, Certik. 

How the attack happened

According to the announcement, automated market maker Curve finance, decentralized trading Trader Joe as well as lending protocol Nereus are possibly affected by the hack.

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However, Curve Finance in a reply was quick to clarify that it was only Nereus that was impacted by the attack.

Following the hack, the Nereus team developed a concrete plan and notified security experts and law enforcement to get their support.

According to the postmortem released by the lender, the attacker deployed a custom smart contract leveraging a $51 million flash loan to manipulate the AVAX/USDC Trader Joe LP pool price for a single block transaction.

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Just like several other flash loan cases, the identity of the attacker is still unknown

The hack brought about a bad debt of USD 500k on the protocol. The team paid off the debt incurred and assured users of the safety of their funds.

Flash loans allow users to borrow and settle loans instantly in a single transaction without providing any collateral. It is available on a variety of Ethereum-based Decentralized finance (DeFi) lending platforms such as Aave and dYdX.

Other DeFi attacks in the crypto space

DeFi lending protocol Agave and Hundred finance also experienced an attack. About $11 million in the form of wBTC, wETH, Chainlink(LINK), Gnosis, USD Coin, and wxDAI was lost in the attack.

StakeSteak, one of the fantom network DeFi protocols, also suffered an attack late last year. The protocol lost approximately $200,000 due to the cramping of its private key from its GitHub repository.

Majorly, the biggest DeFi hack is attributed to the Ronin Bridge hack which lost about $625million to hackers. These hackers are suspected to be the North Korean cybercrime ring, Lazarus Group, who have been flagged due to the involvement of US authorities.

Owing to the limited risk, low cost, and high reward factor associated with flash loans, it has become more pronounced and remains one of the pain points in the ecosystem.

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