September 26, 2022

Mirror Protocol, a DeFi money market on Terra, was exploited for more than $2 million yesterday.

The exploit was caused by a glitch in the oracle price. Validators on Terra Classic were reporting the Luna Classic (LUNC) price instead of the LUNA price, which obviously differs significantly. Mirror Protocol allows the trading of synthetic cryptocurrencies and stocks. Its Mirror BTC (mBTC), Mirror Polkadot (mDOT), Mirror Ether (mETH) and Mirror Galaxy (mGLXY) synthetic asset pools were attacked and drained for over $2 million.

Luckily, though, the pricing error was fixed, and the worst case for Mirror was avoided.

As FatMan, a Terra community whistleblower on Twitter reported, Mirror was at risk of losing even more funds from its other synthetic asset pools if the pricing error had not been fixed. Luckily, the team managed to take appropriate measures with only minutes to spare.

Mirror Protocol Exploited, Avoids Worst Case
Mirror Protocol. Source: Coinmarketcap

Mirror Protocol, a DeFi money market on Terra, was exploited for more than $2 million yesterday.

The exploit was caused by a glitch in the oracle price. Validators on Terra Classic were reporting the Luna Classic (LUNC) price instead of the LUNA price, which obviously differs significantly. Mirror Protocol allows the trading of synthetic cryptocurrencies and stocks. Its Mirror BTC (mBTC), Mirror Polkadot (mDOT), Mirror Ether (mETH) and Mirror Galaxy (mGLXY) synthetic asset pools were attacked and drained for over $2 million.

Luckily, though, the pricing error was fixed, and the worst case for Mirror was avoided.

As FatMan, a Terra community whistleblower on Twitter reported, Mirror was at risk of losing even more funds from its other synthetic asset pools if the pricing error had not been fixed. Luckily, the team managed to take appropriate measures with only minutes to spare.

FatMan also explained that a previous bug in Mirror’s code allowed the protocol to be exploited hundreds of times since 2021. In total, this had amounted to a loss of over $30 million for the protocol, which did not notice the exploit until May 2022.

Mirror’s exploit will not help the cause of Terra, which is trying to generate positive momentum for the re-launch of its forked blockchain. The price of MIR reflected the loss of trust by the market and is down more than 10% over the last 24 hours.