Inverse Finance (Frontier/Anchor) hack — April 2022

On 2 April 2022 an attacker drained Inverse Finance's Anchor money market, the lending product the DAO later renamed Frontier, by manipulating the price feed for Inverse's own governance token, INV.

The attacker withdrew 901 ETH from Tornado Cash and pushed a rapid series of trades through the INV pools on SushiSwap. Anchor priced INV with a time-weighted average oracle, but a window-size bug meant the cumulative price observation only refreshed once a full period had elapsed. Because roughly fifteen seconds passed between the attacker's setup transaction and the attack transaction, that check failed and the oracle carried the manipulated spot price straight through, briefly valuing INV at $20,926. The attacker deposited the inflated INV as collateral and borrowed 1,588 ETH, 94 WBTC, 3,999,669 DOLA and 39 YFI. Inverse stressed that this was not a flash loan attack and that its own contract and front-end code were not at fault.

The headline figure is contested. Inverse Finance put the loss at $15.6 million in its own accounting; CertiK's independent reconstruction valued the borrowed assets at roughly $14.5 million. Most proceeds were cycled back through Tornado Cash and the attacker was never identified.

Inverse paused borrowing on Anchor, moved to a Chainlink-based INV oracle, and committed to repaying affected wallets in full without minting DOLA against its peg or paying compensation in INV. Repayment ran through governance-controlled Debt Converter and Debt Repayer contracts issuing DOLA IOUs against damaged anTokens, and has been gradual rather than immediate. Frontier was later sunsetted in favour of the fixed-rate FiRM market.