Euler Finance, a DeFi lending protocol, recently suffered a flash loan attack resulting in a $197 million loss in what is the biggest crypto hack of 2023 so far. The hack also affected 11 other DeFi protocols. Euler Finance quickly responded by disabling the vulnerable etoken module and the vulnerable donation function to prevent further deposits.
On March 14, Euler Finance informed its users of the situation and disclosed that they are working with various security groups to perform audits of their protocol. Euler Finance also stated that the vulnerable code was reviewed and approved during an outside audit, but the vulnerability remained on-chain for eight months until it was exploited. Despite a $1 million bug bounty in place, the vulnerability was not identified in time to prevent the attack.
Euler Finance has reached out to the attackers to learn more about the issue and potentially negotiate a bounty to recover the stolen funds. This incident emphasizes the importance of regular audits of DeFi protocols to detect vulnerabilities and prevent hacks. As the DeFi industry continues to grow and attract more users, security and reliability will become even more critical for the industry’s success.
