Arbitrum-Based Defi Protocol Lodestar Finance Hacked, Loses About $6.9 Million

Arbitrum-based lending platform Lodestar Finance was exploited on Dec. 10, 2022, according to a tweet from the project's Twitter account on Saturday. Community reports detail that Lodestar lost roughly $6.9 million from the vulnerability.

"[The] protocol was exploited and deposits have been drained," Lodestar's official Twitter account said. "We have set all interest rates to 0 so that supply and borrow balances are not moving while we weigh recovery options.”

Lodestar said the hacker "manipulated the exchange rate of the plvGLP contract" and then "supplied plvGLP collateral to Lodestar and borrowed all available liquidity." This allowed the exploiter to cash out "what they could." However, a "collateralization ratio mechanism prevented them from fully cashing out the plvGLP," the team noted on Saturday.

Lodestar team members explained that they had paused borrowing and liquidation activity. At press time, data from defillama.com indicates that the total value locked (TVL) in Lodestar was drained from close to $7 million down to a mere $11.07. The project's native cryptocurrency lodestar (LODE) has dropped 53% in value against the U.S. dollar in the last 24 hours.

Lodestar is negotiating with the hackers to recover as much money as possible. The team tweeted on Sunday: "If you are the hacker, reach out to us so we can find a white-hat agreement and move on. Recovering the funds of our users is the main priority and we will generously reward your collaboration."