1inch Exploit Overview

Blockchain security firm SlowMist has reported an exploit involving the DeFi aggregator 1inch, affecting its resolver smart contract and resulting in over $5 million in losses.

On March 7, SlowMist founder Yu Xian noted that attackers drained approximately 2.4 million USDC and 1,276 Wrapped Ethereum (WETH) from the compromised contract. He emphasized that regular users were largely unaffected, with the outdated Fusion v1 framework resolvers suffering the most damage.

1inch Confirms Breach

On March 6, 1inch recognized the exploit, revealing that the vulnerability was found in certain resolver smart contracts a day earlier. The team confirmed that only the deprecated Fusion v1 implementation resolvers were impacted, assuring users that their funds were safe, and losses were limited to those specific contracts.

In response to the incident, 1inch initiated efforts to help those affected by securing their systems. They also encouraged all resolvers to conduct audits and update their contracts to prevent future incidents. Resolvers play a crucial role in the 1inch ecosystem, as they help assess which orders to fulfill and act as market makers, providing liquidity for 1inch users.

While the platform did not disclose exact financial losses, it has launched a bug bounty program to gain insights into the incident, offering rewards ranging from $100 to $500,000. As of the latest update, 1inch received 58 submissions and distributed $200 in bounties.

1inch Ecosystem Growth

Despite this setback, 1inch continues to be a major player in the DeFi sector, as indicated by Messari’s latest report. It noted that 1inch facilitated 38.2% of all DEX volume routed through aggregators on supported blockchains in the fourth quarter of 2024.

However, its market share declined by 10% quarter-over-quarter due to increased competition from Odos and CoWSwap. On a positive note, 1inch’s decentralized exchange (DEX) trading volume increased by 104%, rising from $493.5 billion to $1.09 trillion.

The Aggregation Protocol, responsible for routing most trades on 1inch, saw a 37% rise in daily average volume, reaching $369.7 million in Q4. Ethereum topped the list of blockchains for 1inch transactions, representing 66% of the Aggregation Protocol’s volume. The Coinbase-backed Base emerged as the second-largest chain with an 11% market share, overtaking Arbitrum, which fell from 14% to 10%. Together, these three networks accounted for 87% of the platform’s total volume.