Recently, the decentralized finance (DeFi) platform LI.F.I protocol fell victim to an exploit resulting in the loss of over $8 million. According to Cyvers Alerts, suspicious transactions were detected within the LI.F.I cross-chain transaction aggregator, leading to the confirmation of a breach by LI.F.I on July 16. The team issued a statement urging users not to interact with any LI.F.I powered applications as they investigate the potential exploit.
LI.F.I clarified that only users who had manually set infinite approvals were affected by the exploit. Those who did not set such approvals were not at risk. However, the breach resulted in the theft of more than $8 million in user funds, most of which were stablecoins. The hacker’s wallet reportedly holds a significant amount of Ether (ETH) valued at $5.8 million, along with USDC, USDT, and DAI stablecoins.
Crypto security firm Decurity provided valuable insights into the exploit, highlighting the root cause as a vulnerability in the LI.F.I bridge. This vulnerability allowed for an arbitrary call with user-controlled data via a specific function within the smart contract. Decurity emphasized the importance of understanding token approvals and recommended users to revoke relevant authorizations immediately to prevent further exploitation.
Further analysis by PeckShield revealed that the vulnerability exploited in the recent attack on LI.F.I was similar to a previous incident that occurred on March 20, 2022. In that incident, a bad actor manipulated the smart contract’s swapping feature before bridging, resulting in the theft of approximately 205 ETH from 29 wallets. This recurrence of a similar exploit raises questions about whether adequate steps were taken to address vulnerabilities identified in the previous breach.
Following the 2022 incident, LI.F.I disabled all swap methods in its smart contract and implemented fixes to enhance security. However, the fact that a similar exploit occurred again calls into question the platform’s overall security measures. Users are left wondering if LI.F.I has learned from past incidents and implemented sufficient safeguards to protect user funds and prevent future exploits.
The recent exploit on the LI.F.I protocol serves as a stark reminder of the risks associated with DeFi platforms. Users are advised to remain vigilant, carefully manage token approvals, and actively monitor their transactions to mitigate the potential for exploitation. LI.F.I’s response to the breach and its efforts to enhance security will be closely scrutinized by the crypto community to ensure that necessary measures are in place to safeguard user funds and prevent similar incidents in the future.