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Euler Finance Flaws Leads to $197 Million Loss

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Euler Finance Flaws Leads to $197 Million Loss

According to PeckShield’s analysis, Euler Finance was used in a series of transactions on Ethereum (hacker transaction address) due to its logical flaws in donation and liquidation, resulting in a loss of about 197 million dollars. Specifically, DonateToReserves needs to ensure that donors still have excess collateral, and liquidation needs to ensure the “correct” conversion rate from loans to mortgaged assets. In addition, two hackers participated in the attack: 0x5F2… 8B8c and 0xBcA… 7c5C.

Euler Finance was attacked due to logical flaws in its donation and liquidation

Analysis based on this information:


PeckShield, a blockchain security company, recently released an analysis report on how Euler Finance was used in a series of transactions on Ethereum leading to a loss of around $197 million due to logical flaws in their donation and liquidation process. Euler Finance is a decentralized platform that provides a marketplace for financial products and services like derivatives trading and investment strategies.

The flaws in Euler Finance have been attributed to the process of DonateToReserves and liquidation. The DonateToReserves feature is where users can initiate transactions for a new reserves release, in which their ERC-20 tokens will be converted into Euler Finance’s native cryptocurrency, together with a pledge of collateral. The logical loophole here is that the true amount of collateral can be undervalued, which would mean that the donated ERC-20 tokens are then overvalued on the platform leading to a loss. Moreover, Euler’s liquidation process wasn’t able to properly convert loans to collateralized assets which further compounded the flawed system.

The hack was executed by two hackers with wallet addresses ‘0x5F2…8B8c’ and ‘0xBcA…7c5C’. They took advantage of the logical inconsistencies in Euler Finance’s system – it is still unclear how they discovered the vulnerabilities leading to the loss of funds.

PeckShield’s analysis report indicates that hackers continue to target DeFi (decentralized finance) protocols on Ethereum. It further highlights that prompt action needs to be taken to identify and address these vulnerabilities in the smart contract systems of decentralized platforms.

In conclusion, Euler Finance platform’s logical flaws has led to a considerable loss of funds, emphasizing the need for an improved cybersecurity infrastructure in DeFi protocols. The report predicts that these breaches will continue to occur, given the growing popularity and capabilities of hackers.

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