Velocore hack — June 2024

On 2 June 2024 an attacker drained the volatile constant-product liquidity pools of Velocore, a decentralised exchange deployed on the Linea and zkSync Era layer-2 networks. Velocore's post-mortem put the loss at roughly $6.8 million in ETH. The Block reported about $7 million, or around 1,700 ETH, and Merkle Science's tracing of the attacker's holdings put the figure nearer $7.6 million before conversion.

The bug was in the ConstantProductPool contract. Its velocore__execute() function did not verify that it was being called by the protocol's vault, so anyone could invoke it directly with crafted parameters. Each simulated withdrawal raised a feeMultiplier variable, and by repeating the call the attacker pushed the effective fee above 100 per cent. Because the fee arithmetic did not expect a value above 100 per cent, a subsequent small single-token withdrawal underflowed and minted an abnormally large quantity of LP tokens. Combined with a flash loan used to obtain LP tokens and contract the pools, that allowed the attacker to withdraw far more than was deposited. Stable pools were unaffected and Velocore said assets on Telos were secured.

Security firm Hexagate alerted Linea, whose operator halted block production between blocks 5,081,800 and 5,081,801 for about an hour to censor the attacker's addresses, a centralised intervention that drew criticism. Around 700 ETH had already been moved off Linea through a third-party bridge.

Velocore offered a 10 per cent white-hat bounty with a deadline of 3 June at 08:00 UTC. It went unanswered. Merkle Science reported that the proceeds were bridged to Ethereum via Across, consolidated into roughly 1,807 ETH and sent to Tornado Cash. Velocore said it had undergone multiple audits and committed to reimbursing affected users.