Sentiment hack — April 2023

On 4 April 2023 an attacker extracted funds from Sentiment, a lending protocol on Arbitrum, by abusing a read-only reentrancy bug in its integration with Balancer.

Sentiment priced Balancer pool tokens by reading balances reported by the Balancer Vault. The attacker took a flash loan, deposited into a Balancer pool and then called exitPool. Because exitPool sends tokens out before it finishes updating the pool's accounting, that transfer triggered the attacker's fallback function at a moment when the Vault's published state was stale. From inside the fallback the attacker borrowed from Sentiment against the Balancer LP token, which Sentiment valued using the out-of-date reserves. Sentiment described the result as the exploiter being able to borrow against a maliciously inflated asset price.

The size was reported inconsistently. Cointelegraph's first account, based on findings by Gearbox developer Mikhail Lazarev and the researcher known as FrankResearcher, cited over $536,000 in USDC moved through Synapse. DL News reported close to $1 million. Sentiment's own recovery document itemises the bad debt left in the exploiter's account as 463,920 USDC, 363,303 USDT, 81.63 ETH valued at about $152,938, and 125,804 FRAX, totalling roughly $1.1 million.

Sentiment offered the attacker a $95,000 bounty, about ten percent, with a deadline of 6 April. The attacker took it, returning 465.75 ETH which Sentiment valued at $872,724.60. Sentiment combined the returned funds with $49,275.77 paid out by Sherlock and a further $16,425.26 pending from Nexus Mutual, and had Wintermute execute the closing liquidation so depositors could withdraw normally.