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Explained: Hacks

Explained: The Exactly Protocol Hack (August 2023)


Rob Behnke

August 23rd, 2023

In August 2023, the Exactly Protocol — a DeFI project based on the Optimism blockchain — was the victim of an attack. The attacker exploited a vulnerability in the protocol’s contracts to steal over $7 million from the project.

Inside the Attack

The Exactly Protocol hack is an example of a hack enabled by weak validation checks. The attacker was able to bypass the permit check on the protocol’s DebtManager periphery contract by providing it with the address of a fake, malicious market contract.

After getting this malicious contract in place, the attacker executed a malicious deposit function that provided access to the funds that users had deposited into the protocol’s contracts. In total, the attacker was able to steal approximately $7.3 million in ETH from the project.

Lessons Learned from the Attack

The Exactly Protocol hacker exploited a loophole in the protocol’s security checks. By identifying and exploiting this loophole, the attacker was able to deploy a malicious contract that drained the protocol’s funds. Unfortunately, the vulnerability exploited by the attacker was not discovered before launch despite the project’s numerous smart contract audits.