Decentralized lending protocol Ola Finance has become the victim of a re-entrancy attack, which saw a hacker steal approximately $3.6 million worth of crypto from the project, the startup said on Twitter on 31 March.
According to the announcement, the attack happened on the Fuse Network — one of the many blockchains Ola Finance operates on — which prior to the attack had a total value locked of around $13 million. Shortly after detecting the attack, Ola quickly paused the use of its lending protocol on Fuse Network, but not before the hacker was able to get away with $3.6 million worth of crypto tokens. The project noted that its services on other blockchains were unaffected by the exploit, and will remain operational.
Blockchain security firm PeckShield, which worked with Ola to identify the exploit, said the hacker took advantage of a re-entrancy bug in one of Ola’s smart contracts. The individual first used his own funds — transferred from Tornado Cash so they remain untraceable — as collateral to borrow funds from Ola. He then took advantage of the vulnerability within the protocol to remove his collateral without repaying the loan, a process which was repeated several times on other Ola pools.
The attacker then used Fuse Network’s own cross-chain bridge to transfer the stolen funds to other blockchains, and currently holds $3 million on Ethereum, and another $637,000 on BNB Chain. Ola said it is still investigating the incident, and will come up with a post-mortem of the hack in the near future.