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    Attacker exploits IBC hooks vulnerability to steal tokens on Terra blockchain

    theblock.co 31/07/2024 - 06:20 AM

    Security Exploit on Terra LUNA Blockchain

    The Terra LUNA blockchain experienced a security breach that led to the theft of tokens.

    An unknown attacker took advantage of a known vulnerability in a third-party module called IBC hooks, which enables cross-chain contract calls and token transfers.

    The attacker exploited this vulnerability to siphon off value from bridged assets, including the USDC stablecoin and ASTRO tokens from Astroport Finance. Security firm Beosin estimated that over $4 million worth of tokens were affected, causing the price of ASTRO token to decline by 60%.

    In response to the incident, Terra implemented emergency measures to minimize further loss and secure the network while resolving the breach. They coordinated with validators to apply an emergency patch to address the suspected exploit.

    Terra stated, “We will be working with the validators on Terra to apply an emergency patch thereafter to remediate a suspected exploit.”

    The vulnerability had been identified months earlier and patched across the broader Cosmos ecosystem in April. However, a subsequent upgrade in June on Terra did not include this patch, leading to renewed exposure and the eventual exploit, explained Zaki Manian, co-founder of Sommelier Protocol.

    Manian highlighted, “There was a vulnerability in IBC hooks discovered by Composable Finance in April. It was patched across Cosmos. Terra was patched then. It appears that Terra’s June upgrade did not include the patch. All the Axelar USDC bridged to Terra was stolen using the IBC hooks exploit. A large amount of ASTRO was also stolen.”

    Terra had previously undergone a hard fork from the Terra Classic network after a significant financial collapse in 2022, which was initiated by its algorithmic stablecoin, UST, losing its peg to the US dollar.

    The article was updated with additional information.




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