- Exploiter attacked Arcade Finance on both the Ethereum and Optimism network.
- Optimism network saw an uptick in activity; however, sales continued to fall.
Arcadia Finance, a non-custodial protocol that supports on-chain cross-margin accounts, was recently exploited according to PeckShield data. Arcadia Finance is a platform that allows users to collateralize portfolios, access up to 10 times more capital, and interact with other protocols using their deposited collateral and borrowed funds. In this article, we’ll take a look at the attack and how it affected the Optimism network.
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Details of the attack
A community contributor from PeckShield, a reputable cybersecurity firm, recently identified an exploitation incident involving Arcadia Finance on both the Ethereum and Optimism networks, resulting in a loss of approximately $455,000.
The exploiter acted quickly by transferring a total of approximately 179.3 ETH from Optimism[OP] network. This amount was obtained through a combination of 148 ETH bridged from the Ethereum network and 59,000 USDC traded.
The destination of these funds was Tornado Cash, a decentralized privacy solution for cryptocurrencies. By transferring the money to Tornado Cash, the exploiter probably wanted to obscure the transaction history and make it more difficult to trace the source of the money.
#PeckShieldAlert Our community contributor detected that @ArcadiaFi has been abused on both #Ethereum And #Optimism for ~$455K
Up the exploiter #Ethereum was led by 0x5C75e94dD0Ab9c10BFd1B8073DafEF031D3c050dhttps://t.co/blGx5IEAkk
Up the exploiter #optimism… pic.twitter.com/WDzF0XVcmL
— PeckShieldAlert (@PeckShieldAlert) July 10, 2023
The attacker used a process known as frontrunning to exploit the protocol. Front running means that an individual executes a transaction for others in a block. The frontrunner gains an advantage by prioritizing its trade to capture profitable opportunities. This practice may allow them to take advantage of price differences or manipulate trades to their advantage.
Source: PeckShield
Due to the uncertainty surrounding Arcadia Finance, the TVL has fallen significantly in recent days according to data from Defi Llama.
Source: Defi Lama
How’s Optimism?
In addition, the operation of Arcade Finance may also negatively impact the Optimism network. According to data from the token terminal, the growth of daily active users on the Optimism network remained high, showing a 3.9% growth over the past week. However, the revenue generated by the protocol fell significantly. Over the past seven days, sales generated by Optimism fell 52.6%,
This drop in sales could hinder Optimism’s long-term growth.
Realistic or not, here is OP’s market cap in terms of BTC
Coming to the OP token, the price of the token was $1.1215 at the time of writing. The price has dropped significantly in the last month along with the speed. This indicated that the frequency with which OP was traded had decreased.
Source: Sentiment