DeFi App Mirror Protocol Suffers Fresh Exploit Due to LUNA Classic Pricing Error

Mirror Protocol, a decentralized finance (DeFi) application on the Terra blockchain, suffered another exploit due to a misconfiguration of oracle price, just days after it was discovered that it had been exploited for nearly $90 million (about Rs 700 crore) seven months ago. The attacker took advantage of the fact that the oracle price does not match the old Terra Classic (LUNC) token with the new LUNA token. This was confirmed by a member of the Chainlink community who said that Oracles is currently “reporting the price of the new Terra 2.0 $LUNA coin instead of the original Terra Classic $LUNC.”

It was quickly circulated on Twitter by user and Terra Research Forum member FatMan (FatManTerra)Who discovered the previous mirror exploitation four days ago.

According to FatMan, the hack was possible due to a price oracle configuration error. FatMan estimates that the exploit has already cost the Mirror protocol around $2 million (about Rs 15.5 crore) when it was first reported at 1:30 AM WST. FatMan has since tweeted that Mirror Protocol has reacted and disabled mBTC, mETH, mGLXY and mDOT as collateral, thus preventing the attacker from completely draining other liquidity pools. However, we don’t yet have an official number on how well an attacker can drain from the combined Mirror Protocol suite.

For starters, Mirror Protocol is a decentralized application that allows the creation of digital synthetics that track the prices of real-world assets, such as stocks. Mirror’s underlying contracts are published on Terra Classic, but their assets are available on networks such as Ethereum.

This is the second time that the Mirror Protocol has suffered from a major weakness. The previous bug in the Mirror code has been exploited “hundreds of times” since 2021 according to a tweet from FatMan.

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