Chi Protocol Exploited for $8,500 Due to Logic Error
Chi Protocol experienced a loss of approximately $8,500 due to a logic error in its contract. An attacker exploited this vulnerability using a flash loan to manipulate the protocol's burn function.
The incident involved a flaw in the ArbitrageV5 contract’s burn() function, which allowed the attacker to redeem collateral at a hardcoded peg of $1 without verifying the actual value. By purchasing heavily depegged $USC on a thin Uniswap V2 pool, the attacker was able to burn the tokens and claim full-value collateral, leading to significant losses for the protocol. This exploit nearly drained the reserves of Chi Protocol.