Splash Exploit Drain Cardano ADA/OADA Pool

Splash Protocol don release one technical report wey explain how attacker drain the ADA/OADA StableSwap pool on September 13.

After the incident, Optim Finance pause im protocol, remove the remaining liquidity wey dey under im control and warn users say OADA no fit swap go back to ADA through the normal route again.

Splash talk say no other pool type dey affected. The incident happen inside application level smart contract infrastructure and e no compromise the Cardano network itself.

How the StableSwap Validator Take Get Exploit

The vulnerability dey inside Splash stableFnPoolT2t validator, wey power the two asset ADA/OADA StableSwap pool.

The validator dey calculate tradable reserves by subtract the accumulated protocol fees from the pool total balance. But e no verify say the reserves wey remain still dey positive. E still lack strong upper limit on how protocol fees fit increase and e no enforce the expected swap direction, wey suppose be say one asset enter pool while another commot.

The attacker take advantage of those missing controls inside two transactions.

For the first transaction, wey happen 00:47:36 UTC, the attacker deposit 9,870 ADA and small OADA. Almost all the ADA deposit enter as protocol fees, leave only one lovelace add to the pool tradable ADA reserve.

Forty five seconds later, second transaction push the calculated tradable ADA reserve go below zero. Because the StableSwap invariant use negative reserve take evaluate, the validator accept one transaction wey remove both ADA and OADA from the pool.

The LP token supply remain the same, no LP tokens mint or burn during the exploit.

Splash talk say either two extra protections for stop the attack: make dem require make tradable reserves stay positive or make dem enforce upper limit on changes to accumulated protocol fees.

The report still talk say the executed swap branch match the previously audited code. The 2024 audit no identify the missing protocol fee, positive reserve and swap direction checks wey dem use for the attack.

Why the Pool Important for OADA

OADA na ADA pegged synthetic asset wey Optim Finance develop. Users fit mint OADA by depositing ADA, but the system no provide direct way to redeem OADA back into ADA.

Instead, users normally dey exit through the ADA/OADA StableSwap pool for Splash. The pool still support Optim Algorithmic Market Operation, wey manage liquidity to keep OADA close to im ADA peg.

The official incident report put the exploit for the Splash validator. E no identify vulnerability for Optim AMO or describe the incident as Optim contract hack.

Draining the Splash pool remove OADA primary exit route and the market wey dey support im peg.

The attacker then sell the removed OADA through one Minswap V2 OADA/FLDT pool. The swap produce approximately 563,073 FLDT, wey later convert to approximately 115,323 ADA.

Optim report say the attacker still empty OADA liquidity from other trading venues. Those protocols no be the same validator flaw compromise dem. Their markets just affect after the main Splash pool don already drain.

Wetín Go Happen Next

Optim talk say im protocol don pause and dem don remove all available liquidity. Dem instruct anybody wey dey provide liquidity for OADA or the Optim governance token O make dem withdraw immediately and warn users make dem no create new OADA liquidity positions.

Optim never clear whether the pause cover every product and module or only operations wey connect to OADA.

Splash don mark the affected StableSwap code as vulnerable and dem dey trace funds wey go addresses wey connect to exchange deposit systems. The team talk say dem plan to contact KuCoin and Gate.io with transaction information.

Splash still invite the attacker to return the funds through possible white hat resolution wey go involve reward and no further escalation.

No funds don publicly confirm as returned. Splash or Optim never announce any reimbursement program, recovery timeline or fixed validator release.