Just In: Hackers Steal $6 Million in Delta Prime Hack, Expose Vulnerabilities in DeFi Protocols

Hackers have exploited the Delta Prime protocol, draining over $6 million in a sophisticated attack. The exploit, now dubbed the “Delta Prime hack,” has brought to light significant security flaws in DeFi systems, emphasizing the need for heightened scrutiny and improved security measures within the sector.

On September 14, 2024, the attacker managed to execute a complex scheme involving the minting of an astronomical number of Delta Prime USD (DPUSDC) deposit receipt tokens. Data from Arbiscan, a prominent block explorer, reveals that the hacker minted over 115 duovigintillion DPUSDC tokens—equivalent to 1.1 x 10^69 in scientific notation. Despite this massive minting, the attacker redeemed only $2.4 million worth of tokens.

Delta Prime Hack Exposes Major DeFi Vulnerabilities

The Delta Prime hack was carried out by compromising an admin account, identified by the ending sequence b1afb, most likely through the theft of a developer’s private key. With control of this account, the hacker exploited an “upgrade” function in the protocol’s liquidity pool contracts. This function, typically used for legitimate software upgrades, was manipulated to point to malicious contracts under the attacker’s control.

Chaofan Shou, a leading blockchain security specialist, commented on the breach: “The Delta Prime hack is a stark reminder of how vulnerable DeFi protocols can be when upgradeable contracts are not handled with extreme care. The ability to upgrade contracts is crucial, but it must be managed securely to prevent exploits like this.”

The attacker’s manipulation allowed them to mint and redeem other deposit receipt tokens beyond DPUSDC. They minted over 1 duovigintillion Delta Prime Wrapped Bitcoin (DPBTCb), 115 octodecillion Delta Prime Wrapped Ether (DPWETH), 115 octodecillion Delta Prime Arbitrum (DPARB), among others, redeeming a fraction of these to siphon off more than $1 million in Bitcoin, Arbitrum (ARB), and other assets.

In response, Delta Prime issued a statement on X (formerly Twitter) acknowledging the breach: “At 6:14 AM CET, DeltaPrime Blue (Arbitrum) was attacked and drained for $5.98M. The Avalanche version, DeltaPrime Blue, is unaffected by this incident. We are actively investigating and our insurance will cover potential losses where necessary.”

$6 Million Lost in Delta Prime Exploit

This incident underscores the broader risks associated with upgradeable smart contracts in DeFi protocols. While the Web3 ecosystem is designed to protect against widespread private key theft, centralizing control through upgradeable contracts introduces a vulnerability that can lead to extensive losses if compromised. The debate continues among developers about whether the ability to upgrade protocols is worth the potential risk of exploitation.

The Delta Prime hack joins a troubling list of recent DeFi exploits. On September 11, a similar exploit targeted the CUT token liquidity pool, draining over $1.4 million using a malicious line of code that pointed to an unverified function. Earlier, on September 3, the Penpie protocol lost over $27 million to an attacker who registered a malicious contract as a token market.

Delta Prime Attack Reveals Critical Security Gaps

As the DeFi landscape evolves, the Delta Prime hack serves as a critical reminder of the need for rigorous security practices. The exploit not only highlights the risks inherent in DeFi protocols but also pushes the industry toward reevaluating the balance between functionality and security in smart contract design.

For now, the DeFi community must grapple with the implications of the Delta Prime hack, as developers and users alike work to strengthen security and prevent future breaches. The fallout from this attack will likely influence best practices and policy decisions in the decentralized finance space for years to come.

By dissecting the Delta Prime hack, the DeFi sector gains crucial insights into safeguarding against similar threats and improving the resilience of decentralized financial systems.

Get more from The Bit Gazette