$20m Hack Halves Sonne Finance Market Cap; Donation Attack Manipulates Platform Tokens

Following a major hack that drained $20 million from its decentralized lending protocol, Sonne Finance’s SONNE token plummeted by 60%, reducing its market cap to $20 million. The exploit, which occurred on Sonne’s platform on the Optimism blockchain, involved a “donation” attack that manipulated certain markets offered by the platform, allowing the attacker to steal various tokens before being interrupted. The developers have announced that they will offer a bounty for the hacker’s capture while they work to retrieve the stolen funds. The Base blockchain version of the platform was not affected by the hack. Sonne Finance added token markets for Velodrome Finance’s VELO following a recent community proposal, but the attacker took advantage of a two-day timelock to execute four transactions, which included creating markets and adding collateral factors. By donating large amounts of cryptocurrency, the attacker was able to manipulate the exchange rate between two tokens, causing the platform to believe it had more collateral than was actually available, and enabling the theft of millions of VELO, ether, and USD Coin (USDC). In previous instances, Sonne Finance had avoided similar issues by adding markets with zero collateral factors, manually adding collateral, and permanently removing it before anyone could manipulate the market. The developers have stated that they are investigating the exploit and will provide further updates.