DeFi Lender Silo Finance Loses $545K to Hackers

Decentralized crypto lending protocol, Silo Finance, suffered a hack due to a smart contract vulnerability, resulting in estimated losses of $545,000. The blockchain security firm, PeckShield, was the first to detect the exploit and notify the lending platform.

Silo Finance is a non-custodial lending protocol operating on Sonic and Ethereum Virtual Machine (EVM)-based blockchains. Aiham Jaabari founded the protocol in 2021.

Silo Finance Falls Victim To Hackers

According to PeckShield’s investigation, the vulnerability was a user-controlled input issue in the contract’s openLeveragePosition function. The hackers exploited this weakness to compromise Silo Finance’s protocol.

The malicious activity was linked to a wallet funded via Tornado Cash, a crypto mixer that obscures transaction trails. PeckShield’s threat intelligence system flagged the suspicious code over three minutes before the exploit. Still, this was not enough to curtail the attack. Consequently, the crypto lender parted ways with over half a million dollars.

The Silo Finance team acknowledged the attack and halted the affected contract after the breach. The team highlighted that the exploited contract was a test for a new leverage feature, not part of the main protocol infrastructure. They further assured users that the platform’s core contracts remained unaffected. This helps to eliminate the fear of potential damage and maintains relative user trust in the protocol’s stability and security.

However, the exploited smart contract only used funds from Silo DAO, the protocol’s governing decentralized autonomous organization, which were used to test an experimental leverage feature. As a result, only these internal funds were lost in the exploit.

Impact on SILO

Following recent smart contract breach, on-chain analytics revealed SILO traders rapidly selling or rebalancing their holdings. This had a ripple effect on the protocol’s token price. According to CoinMarketCap data, SILO dropped to as low as $0.04035, representing an 11% decline in the past 24 hours.

At the time of writing, SILO’s price has rebalanced to $0.0454. This represents a mild 2.6% increase over the past 24 hours.

The post DeFi Lender Silo Finance Loses $545K to Hackers appeared first on Cointab.