An external lending adapter designed for Aave fell victim to an exploit, resulting in the theft of approximately 114 ETH valued at over $300,000, though the core protocol itself was left untouched.
Blockchain security firm SlowMist reported on Oct. 2 that the perpetrator targeted two Safe multisig wallets by exploiting a vulnerability within the FlashLoopAdapter, which integrates with Aave v3 positions. The security flaw permitted the hacker to bypass authentication checks on the adapter, perform arbitrary calls, and withdraw collateral from the targeted wallets.
SlowMist calculated direct losses at roughly 114.09 ETH, noting that approximately 1,300 WETH of debt was simultaneously settled during the exploit to release collateral linked to the positions.
Stani Kulechov, founder of Aave, confirmed that the breach did not impact Aave v3’s underlying smart contracts, stating:
“This is not Aave v3 contract, it’s third party external adapter built on top of Aave, zero effect on Aave v3.”
This separation is crucial for Aave, which stands as the biggest decentralized lending protocol holding upwards of $33 billion in total value locked. The breach impacted external infrastructure built on top of the network.
Fake Safe bypass opened access to collateral
According to SlowMist, the vulnerability originated in the open() and close() functions of the FlashLoopAdapter, which are designed to verify if a calling Safe has authorized the adapter as a module.
That verification process could be deceived.
SlowMist explained that the attacker deployed a counterfeit Safe contract that consistently confirmed the module was active when queried. Consequently, the adapter trusted the fraudulent authentication and advanced to execute its internal swap mechanism.
A more critical vulnerability followed. The adapter permitted the caller to define both the router and the calldata utilized in an external contract execution.
The malicious actor redirected the router toward the victim’s Safe and provided commands that triggered the Safe’s execTransactionFromModule function. Because the FlashLoopAdapter was previously authorized as a module on the compromised wallets, this command granted the attacker authorization to run transactions via the victims’ Safes.
SlowMist noted that this method was deployed to drain weETH and related Aave position collateral from a pair of multisig wallets.
This event underscores a persistent danger within decentralized finance, where a primary protocol can stay secure while surrounding integrations introduce independent vulnerabilities.
For Aave, immediate risk seems restricted to individuals utilizing the flawed adapter. Attention now turns to whether additional wallets activated this identical module and if the adapter creators can discover other vulnerable positions prior to attackers exploiting the same authentication weakness again.