Lightning Network Exploited Again! Attacker Makes $640,000, Detailed Analysis of Genius Steps

bZx has suffered from arbitrage attacks, and today news of another incident has emerged.

bZx co-founder Kyle Kistner stated in the Telegram group that they have been exploited again to earn ETH. Kistner also explained that they can handle it as they did last time. The company also announced on Twitter: "Due to suspicious trades on the decentralized exchange Synthetix, the protocol has been temporarily paused once again."

The Block's media editor Larry Cermak was the first to report this news and later analyzed this "elegant maneuver" on Twitter:

1. Flash loaned out 7,500 ETH
2. Traded 3,517 ETH on Synthetix at a price of 940k sUSD (close to $1)
3. Used 900 ETH to buy sUSD on Kyber and Uniswap to raise the price above $2
4. Borrowed 6,796 ETH on bZx using sUSD as collateral (much more than expected because the price of sUSD seemed to be higher)
5. Repaid the flash loan (7,500) using the borrowed ETH and remaining ETH balance (6,796 + 3,083), netting 2,379 ETH (9,879-7,500)
6. bZx ETH pool lost about $1.8 million, and the sUSD pool lost $1.1 million. The attacker earned about $640,000.

Further Reading

• "Analysis" How did Flash Loan make $360,000 risk-free in 13 seconds, and how did they resolve it?
• DeFi locks up $1 billion milestone, analyst: mostly from Ethereum price surge

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