0VIX Protocol hack — April 2023

On 28 April 2023 at 10:45 UTC an attacker drained the 0VIX lending protocol on Polygon PoS in a single transaction at block 42054769.

0VIX priced vGHST, a wrapper for staked Aavegotchi GHST, with an oracle that divided the GHST held by the GotchiVault by the vault's outstanding shares. After taking flash loans of 24.5M USDC, 6.15M USDT and 1.95M GHST from Aave and Balancer and building a large leveraged vGHST borrow position across two addresses, the attacker sent 1.656M GHST straight to the vault using GHST.transfer() rather than vault.enter(). Because no shares were minted, the reported exchange rate jumped from 1.03 to 1.78 and the borrow position's loan-to-value ratio rose to 135%. Liquidation incentives on 0VIX were a static 10%, so above a 90.9% LTV each liquidation left the position more insolvent rather than less. The attacker self-liquidated 24 times until all collateral was repossessed, leaving $6.46M of bad debt, then redeemed 23.765M USDC and 336k vGHST.

Published figures differ. Early reports based on on-chain data put the theft at roughly $2M. 0VIX's own post-mortem of 11 May 2023 calculated a net loss of $4.33M paid out of user funds, after accounting for $792k of swap slippage costs borne by the attacker and $735k of bad debt booked as protocol fees.

The proceeds left Polygon as 1,069 ETH bridged via Stargate and were deposited to Tornado Cash in three batches: 520 ETH immediately, 239 ETH the following day and the remaining 310 ETH on 9 May. 0VIX recovered an initial 206k vGHST following a GotchiVault DAO vote and later rebranded as Keom.