BNB (bnb) 
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Attackers recently exploited a critical overflow vulnerability in the logic of Cetus Protocol’s automated market maker (AMM), resulting in user losses totaling $223 million. This incident, detailed in a post-mortem by blockchain security firm Dedaub, is being described as one of the most significant decentralized finance (DeFi) exploits to date.
The Technical Flaw Behind the Exploit
According to Dedaub, the exploit stemmed from an overflow issue in the mathematical computations used by Cetus’s AMM. A miswritten condition failed to properly handle the most significant bits of large numerical inputs, leading to unintended results. Instead of rejecting excessively large values, the system truncated them, making the output appear much smaller than it should have.
This flaw allowed the attacker to deposit a single token, which the protocol mistakenly interpreted as an enormous liquidity position. Leveraging this error, the attacker withdrew substantial real assets from the liquidity pools, causing massive financial losses.
Previously Flagged Vulnerabilities
This specific vulnerability had been flagged earlier in 2023 during an audit conducted by blockchain security firm Ottersec. At that time, the issue was identified in the protocol’s codebase while it was deployed on the Aptos network. However, when the code was later ported to the Sui blockchain, the underlying issue persisted.
Although developers attempted to implement safeguards, the overflow check was flawed, enabling the same type of exploit to occur on the Sui network. Dedaub emphasized the importance of manually verifying overflow protection, particularly when working with complex mathematical computations or large numerical inputs in DeFi protocols.
“This incident shows why edge cases in DeFi can’t be ignored,” Dedaub noted, urging developers to prioritize rigorous testing and review of advanced math in decentralized systems.
Impact on the Sui Ecosystem
The exploit, which took place in the early hours of May 22, dealt a heavy blow to the Sui ecosystem. Cetus, one of the leading decentralized exchanges (DEX) on the Sui network, suffered significant losses across its liquidity pools. This led to a sharp sell-off in related tokens, including SUI and CETUS, both of which dropped over 40% in value shortly after the breach.
Smaller market cap tokens and memecoins native to the Sui blockchain experienced even steeper declines, with some losing over 90% of their value. The exploit’s ripple effects also impacted investor sentiment, posing challenges for the broader DeFi community on Sui.
Efforts to Recover Stolen Funds
In response to the attack, the Sui Foundation collaborated with validators to freeze approximately $163 million of the stolen funds. Additionally, Cetus Protocol has announced a $5 million bounty for any information that could help identify the perpetrators behind the exploit.
This incident serves as a stark reminder of the risks associated with DeFi platforms and the critical importance of thorough auditing and testing. Developers are encouraged to address potential edge cases proactively to prevent similar vulnerabilities in the future.
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