• Outdated software at validators leads to serious confusion
• The exploit has already caused damage of around two million dollars
• This is the second massive exploit in a year
An error in course determination enables the catastrophic exploit
The decentralized finance platform for synthetic assets Mirror Protocol has recently encountered another serious problem: As Cointelegraph reports, a discrepancy in the reported prices of the underlying assets has led to an exploit that has almost cost the platform all its capital. An exploit is the exploitation of a vulnerability in a system with the aim of profiting from the error. The exploit was reported by the governance participant Mirroruser in the protocol forum. The damage is massive: Mirror BTC (mBTC), Mirror Polkadot (mDOT), Mirror Ether (mETH) and Mirror Galaxy (mGLXY) synthetic pools were at one point down over $2 million.
advertising
The Mirror platform is designed to trade synthetic assets such as stocks and cryptocurrencies on Layer 1 blockchains Terra and Terra Classic, BNB Chain and Ethereum. The exploit is based on a price determination error for Luna Classic (LUNC). In detail, the validators on Terra Classic confused the price of LUNC, which was actually $0.000122, with the price of the new Terra (LUNA) at $9.32. According to Chainlink community ambassador ChainLinkGod, the problem was that the Terra Classic validators had been using an outdated version of the oracle software. As Decrypt explains, this huge price difference allowed the attackers exploiting the exploit to use the hyper-inflated cryptocurrency to mine synthetic assets and sell them for UST and USDC. As a result, some of the Mirror assets tumbled, allowing for so much capital to be wiped out.
Last year, the Mirror Protocol suffered an exploit worth millions
In fact, this case is not the first in which the Mirror platform has been rocked by a devastating exploit. A flaw in the Mirror code appeared back in October of last year and, according to a community member named FatMan, has since been exploited hundreds of times. The Terra ecosystem has now been restarted, and the Terra 2.0 currency, which is a fork of the old blockchain and is now called Terra Classic, went online as planned.
LUNA tokens were distributed via airdrop to investors who held the previous version of LUNA and the stablecoin TerraUSD (UST) at the time of the Terra ecosystem collapse earlier this month. When the price given by the oracle corresponded to the actual market value again, the error at LUNC was fixed. A former employee of the Securities and Exchange Commission previously told The Block that Mirror Protocol was under investigation for its involvement in TerraUSD.
Thomas Weschle / Editor finanzen.net
Image sources: Phongphan / Shutterstock.com