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KyberSwap attacker used ‘infinite money glitch’ to drain funds — DeFi expert

Press Releases Crypto News Cointelegraph KyberSwap attacker used ‘infinite money glitch’ to drain funds — DeFi expert

The attacker who drained $46 million from KyberSwap relied on a “complex and carefully engineered smart contract exploit” to carry out the attack, according to a social media thread by Ambient exchange founder Doug Colkitt.

Colkitt labeled the exploit an “infinite money glitch.” According to him, the attacker took advantage of a unique implementation of KyberSwap’s concentrated liquidity feature to “trick” the contract into believing it had more liquidity than it did in reality.

1/ Finished a preliminary deep dive into the Kyber exploit, and think I now have a pretty good understanding of what happened.

This is easily the most complex and carefully engineered smart contract exploit I’ve ever seen…

— Doug Colkitt (@0xdoug) November 23, 2023

Most decentralized exchanges (DEXs) provide a “concentrated liquidity” feature, which allows liquidity providers to set minimum and maximum prices at which they would offer to buy or sell crypto. According to Colkitt, this feature was used by the KyberSwap attacker to drain funds. However, the exploit “is specific to Kyber’s implementation of concentrated liquidity and probably will not work on other DEXs,” he said.

The KyberSwap attack consisted of several exploits against individual pools, with each attack being nearly identical to every other, Colkitt said. To illustrate how it worked, Colkitt considered the exploit of the ETH/wstETH pool on Ethereum. This pool contained Ether (ETH) and Lido Wrapped Staked Ether (wstETH).

The attacker began by borrowing 10,000 wstETH (worth $23 million at the time) from flash loan platform Aave, as shown in blockchain data. According to Colkitt, the attacker then dumped $6.7 million worth of these tokens into the pool, causing its price to collapse to 0.0000152 ETH per 1 wstETH. At this price point, there were no liquidity providers willing to buy or sell, so liquidity should have been zero.

The attacker then deposited 3.4 wstETH and offered to bu

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Author: Tom Blackstone

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