Decentralized Exchange BunniXYZ Loses $8.4 Million in Liquidity-Based Exploit

Bunni protocol attributes its $8.4 million flash loan exploit to a rounding bug in smart contract withdrawals, with investigators confirming vulnerabilities while law enforcement and exchanges assist in fund recovery.

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Summary

Bunni decentralized finance protocol lost $8.4 million on September 2 after a flash loan attack manipulated the weETH/ETH and USDC/USDT pools. The attacker exploited a rounding error in the withdrawal function by conducting 44 small withdrawals, reducing liquidity by over 84% before executing profitable swaps. Security firm Cyfrin confirmed the vulnerability. Bunni has offered the exploiter a 10% bounty for returning funds, notified exchanges, and engaged law enforcement. Withdrawals have since been re-enabled, though deposits and swaps remain paused. The attack left Bunni’s TVL reduced to about $50 million, down from over $80 million. The incident adds to August’s $163 million in crypto hacks and scams, including losses at Venus Protocol, BtcTurk, and several other platforms.

Terms & Concepts
  • Flash Loan: A type of uncollateralized loan that must be borrowed and repaid within a single blockchain transaction, often exploited in DeFi attacks.
  • Liquidity Pool: A collection of cryptocurrency funds locked in a smart contract, enabling decentralized trading, lending, and other functions by providing market liquidity.
  • Rounding Error: A flaw in smart contract arithmetic where repeated small transactions exploit balance rounding, leading to manipulated outcomes in DeFi protocols.