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<p class="is-style-lead">Arcadia Finance, a decentralized finance (defi) protocol, has suffered a major setback, falling victim to a code exploit, resulting in a significant loss of approximately $455,000.&nbsp;</p> 
<p>The breach was initially detected by blockchain security firm PeckShield, which identified a coding oversight related to untrusted input validation as the root cause of the vulnerability. Exploiting this coding loophole, a hacker managed to drain funds from Arcadia’s Ethereum and Optimism vaults, putting the defi protocol in a precarious position.</p> 
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   <p lang="en" dir="ltr"><a href="https://twitter.com/hashtag/PeckShieldAlert?src=hash&amp;ref_src=twsrc%5Etfw" target="_blank" rel="noopener">#PeckShieldAlert</a> Our community contributor has detected that <a href="https://twitter.com/ArcadiaFi?ref_src=twsrc%5Etfw" target="_blank" rel="noopener">@ArcadiaFi</a> has been exploited on both <a href="https://twitter.com/hashtag/Ethereum?src=hash&amp;ref_src=twsrc%5Etfw" target="_blank" rel="noopener">#Ethereum</a> and <a href="https://twitter.com/hashtag/Optimism?src=hash&amp;ref_src=twsrc%5Etfw" target="_blank" rel="noopener">#Optimism</a> for ~$455K<br><br>The exploiter on <a href="https://twitter.com/hashtag/Ethereum?src=hash&amp;ref_src=twsrc%5Etfw" target="_blank" rel="noopener">#Ethereum</a> was frontrun by 0x5C75e94dD0Ab9c10BFd1B8073DafEF031D3c050d<a href="https://t.co/blGx5IEAkk" target="_blank">https://t.co/blGx5IEAkk</a><br><br>The exploiter on <a href="https://twitter.com/hashtag/optimism?src=hash&amp;ref_src=twsrc%5Etfw" target="_blank" rel="noopener">#optimism</a>… <a href="https://t.co/WDzF0XVcmL" target="_blank">pic.twitter.com/WDzF0XVcmL</a></p>— PeckShieldAlert (@PeckShieldAlert) <a href="https://twitter.com/PeckShieldAlert/status/1678248292327763968?ref_src=twsrc%5Etfw" target="_blank" rel="noopener">July 10, 2023</a>
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<p>The company confirmed the breach on Twitter and suspended the affected contracts to minimize further losses.</p> 
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   <p lang="en" dir="ltr">We are aware of a potential exploit in our protocol. <br>We have paused the contracts and are investigating the root-cause with security experts as we speak. More info will follow as it comes available.</p>— Arcadia Finance (@ArcadiaFi) <a href="https://twitter.com/ArcadiaFi/status/1678285634727706625?ref_src=twsrc%5Etfw" target="_blank" rel="noopener">July 10, 2023</a>
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<p>PeckShield’s investigation further revealed another vulnerability in Arcadia’s code, highlighting the absence of untrusted input validation and reentrancy protection.</p> 
<p>The lack of reentrancy protection allowed hackers to bypass the internal vault health check by enabling instant liquidation.</p> 
<p>PeckShield’s findings indicate that the majority of the stolen funds, approximately 180 ethereum (<a href="https://crypto.news/price/ethereum/">ETH</a>), originated from Arcadia’s Optimism vault. Allegedly, these funds were moved through <a href="https://crypto.news/tag/tornado-cash/">Tornado Cash</a>, an ethereum-based mixing service. However, the stolen ETH, valued at over $340,000 at the time of writing, remains stagnant in the suspected hacker’s wallet.</p> 
<p> You might also like: <a href="https://crypto.news/logan-pauls-energy-drink-faces-regulatory-scrutiny-in-us/"> Logan Paul’s energy drink faces regulatory scrutiny in US </a> </p> 
<h2 class="wp-block-heading" id="strong-defi-exploits-continue-to-challenge-crypto-space-strong"><strong>Defi exploits continue to challenge crypto space</strong></h2> 
<p>This exploit adds to a series of high-profile attacks within the defi space. Just days before, the Multichain hack saw a staggering <a href="https://crypto.news/tether-freezes-usdt-addresses-linked-to-the-130-million-multichain-exploit/">$130 million</a> stolen. In response, stablecoin issuers Tether and Circle took action blacklisting five addresses connected to the stolen funds.</p> 
<p>Earlier this month, the Poly Network also suffered a <a href="https://crypto.news/polynetwork-remains-suspended-24-hours-after-5m-hack/">$5.5 million</a> exploit, further highlighting concerns surrounding the security of defi protocols.</p> 
<p>Arcadia Finance has been actively engaging with the hacker, seeking to leverage its community and security options to achieve a swift resolution. The protocol emphasized its commitment to recovering funds for its users as its top priority.</p> 
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<p>To regain trust and bolster security, Arcadia Finance is expected to conduct a thorough analysis of its existing security systems and implement more stringent measures to prevent future breaches.&nbsp;</p> 
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 <p>“Our number one priority is recovering funds for Arcadia protocol users.”</p> <cite>Arcadia Finance on Twitter.</cite>
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<p>The impact of this breach is already evident, as a defi tlv aggregator <a href="https://defillama.com/protocol/arcadia-finance" target="_blank" rel="noreferrer noopener">DeFiLlama </a>reported a significant 76% drop in Arcadia Finance’s total value locked (tel), falling from $605,000 to $143,000 within a short span of time.</p> 
<p> Read more: <a href="https://crypto.news/voyager-creditors-withdrawals-surpass-250m-in-18-days/"> Voyager creditors’ withdrawals surpass $250m in 18 days </a> </p>

Arcadia Finance loses $455m in defi protocol hack

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