The vulnerability that led to the recent ZetaChain exploit was flagged through its bug bounty program prior to the attack, but dismissed as intended behavior.
In the autopsy published The team said Wednesday that the incident prompted a review of how it handles bug bounty reports, particularly reports involving chained attack vectors that may appear harmless in isolation but are dangerous in combination.
“This bug was reported and they just ignored it,” one user wrote on X. “That’s how bug allocation programs currently work with these protocols; they incentivize losses to the protocol, TVL, and user balance instead of paying the researcher to discover and fix the bug,” they added.
ZetaChain lost approximately $334,000 on Sunday due to a deliberate exploit targeting its cross-chain access contract. The exploit drained funds across nine transactions across four chains, including Ethereum, Arbitrum, Base and BSC, all from wallets controlled by ZetaChain. User funds are not affected.
Related: Crypto hackers stole $17 billion in the past 10 years: DefiLlama
An attacker exploits small design flaws
ZetaChain said in its postmortem that the attacker exploited three design flaws that may have seemed minor individually, but together opened the door to a full drain. First, the gateway allowed anyone to send arbitrary cross-chain instructions without restriction. Second, on the receiving end, it would execute almost any command on any contract, with a block list so narrow that basic token transfer functions were missing.
Third, wallets that previously used the gateway left unlimited spending allowances that were never cleared. Combining all three, the attacker simply told the gateway to transfer tokens from the victim’s wallet to his own, and the gateway complied.
Source: ZetaChain
“This was not an opportunistic attack,” ZetaChain said in its postmortem. The attacker funded their wallet via Tornado Cash three days prior to the exploit, applied a dedicated drop contract to ZetaChain and launched a campaign to poison addresses before entering it into their transaction history via dust transfer.
ZetaChain added that a patch that permanently disables the arbitrary call function is being deployed to mainnet nodes. The platform has also removed unlimited token approvals from its deposit flow, replacing them with exact amount approvals in the future.
Related: Ethical hacker intercepts $2.6 million in Morpho Labs exploit
AI DeFi exploitation success rate is increasing
New study a16z tested could an off-the-shelf AI agent go beyond identifying DeFi vulnerabilities and actually produce operational exploits. Using OpenAI’s Codex against a dataset of 20 real Ethereum price manipulation incidents, the researchers ran the agent in a sandbox with no access to future transaction data and no guidance on how the attacks work. The agent succeeded in only 10% of cases.
However, when the researchers provided the agent with structured knowledge of common attack patterns and exploit workflows, the success rate jumped to 70%.
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