Here are the details on how the Avax Flash loan happened.
A flash loan attack on the Avalanche blockchain has extracted $370,000 in USDC from a smart contract, as well as several liquidity providers.
Decentralized exchange Trader Joe, staking platform Nereus Finance and automated market maker Curve Finance are thought to have been impacted, the firm said in a tweet.
A flash loan exploit is an abuse of the security of a smart contract whereby a nefarious actor typically borrows uncollateralized funds from a lending protocol and manipulates the price of a given asset, driving up its value.
Because of the nature of a flash loan, the attacker then sells back the borrowed capital in the same transaction after they’ve managed to arbitrage the asset, pocketing the difference.
The attack, executed around 3:26 pm ET on Tuesday, was picked up by CertiK’s on-chain security software Skynet which actively monitors and displays suspicious smart contract data online.
The identity of the attacker, as in the majority of cases involving flash loan exploits, remains unknown.
Avalanche, a layer-1 smart contract platform built by Singapore-based Ava Labs, has risen to prominence in recent years and has grown to become a top 20 crypto in market cap terms.
Compatible with Ethereum, the Avalanche network consists of an ecosystem of decentralized applications as well as staking initiatives via its proof-of-stake consensus mechanism.
Flash loans have been involved in several high-profile crypto heists before, including the third-largest of 2022, when DeFi dapp Beanstalk lost $182 million.