Exactly Protocol hack — August 2023

Exactly Protocol, a lending market on Optimism, was exploited on 18 August 2023. Its post-mortem records the first attack transaction at 08:46:13 UTC and the protocol paused at 10:40:55 UTC, with all operations except withdrawals disabled. The flaw sat in DebtManager, a periphery contract used for leveraged positions. Its input validation checked the permit argument instead of the market argument, and because the market was also supplied by the caller, the permit check could be bypassed by passing an attacker-deployed contract as the market. That malicious market re-entered crossDeleverage during an external call with msg.sender set to the victim's address, letting the attacker pull collateral out of user positions and route it through attacker-controlled Uniswap pools. The attacker also depressed market share value by withdrawing fixed-rate loans, which enabled repeated liquidation and extraction cycles. About three hours in, a second address began copying the attack. Exactly puts the total at $7,612,038 across 117 accounts, with roughly 4,330 ETH taken by the main attacker, and roughly 140 ETH by the copycat. Independent analyses published lower numbers: Halborn and Neptune Mutual around $7.2 million, and BlockSec and Beosin, cited by The Block and Cointelegraph, about $7.3 million. An initial estimate of more than $12 million circulated on the day and was withdrawn. Proceeds were bridged off Optimism to Ethereum through Across Protocol and the Optimism bridge. Exactly filed a police report and offered a bounty for information. The funds were not recovered. Its governance later passed EXAIP-03, distributing one million EXA tokens, a tenth of total supply, pro rata to the 117 affected accounts, with compensation to be adjusted downward if the stolen assets were recovered before June 2024.