HACK ANALYSIS 3 min read

Sentiment Hack Analysis — Reentrancy Attack

Overview:

On April 4, 2023, the Sentiment was reported to have experienced a read-only reentrancy attack, resulting in price manipulation on the protocol and a total loss of $1M.

Smart Contract Hack Overview:

Attacker’s transaction: 0xa9ff2b
0x62c5 proxy contract: 0x62c5
Attackers address:0xdd0cdb
Lending Pool: 0x270,0x794
Balancer vault: 0xba12
Vulnerable code:#L108

Decoding The Smart Contract Vulnerability:

The attacker began the attack with a flashloan of 10,050 ETH from the sentiments lending pool some WBTC and USDC.

The attacker then manipulated the LP pool balance by using joinPool() first to join the pool, and the balance was updated with a new balance when the attacker moved liquidity in the pool.

The attacker then used the exitPool() function to withdraw the money, and the balance vault contract delivered eth to the attacker’s contract, which used the fallback() mechanism to remove the funds.

In the fallback function, the attacker invoked the proxy contract’s borrow function, which computed a price based on the Balancer Vault return data. getPoolTokens().

As soon as the attacker executed exitPool(), the attacker re-entered, and the overall supply of the pool was lowered since the attacker withdrew all of the deposited LP tokens between the exit transaction and its successful completion.

The attacker subsequently moved all of the ETH to their wallet, resulting in a total loss of $1 million.

Mitigation and Best Practices:

The attack could have been prevented if the sentiment protocol would have stayed up to date with the latest hack as the balancer was compromised with the same attack a month and changes should have been done to the sentiments architecture and code accordingly.
Use reentrancy-preventive function modifications, such as Open Zepplin’s Re-entrancy guard
Always make sure that any state changes occur internally first, such as updating balances or calling internal functions before calling external code.
Use the check-effect pattern for interaction, Checks highlight the veracity of the circumstances. Effects highlight the state changes that result from interactions. The transactions carried out between contracts or functions are referred to as interactions.
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Conclusion:

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Sentiment Hack Analysis — Reentrancy Attack