Float Protocol hit by $28K flash loan attack through Uniswap V3 manipulation

Float Protocol has lost about $28,000, or 10.71 ETH, after an attacker used a flash loan to manipulate a Uniswap V3 spot price and exploit how its Hypervisor contracts calculated liquidity provider share values.

SlowMist said on Aug. 31 that the attacker distorted the Uniswap V3 slot0 spot price, causing affected Hypervisor contracts to calculate incorrect LP share values. The blockchain security firm traced the exploit to functions that lacked TWAP or oracle verification and slippage protection.

Using large swaps in the underlying V3 liquidity pool, the attacker manipulated the values returned by currentTick() and getTotalAmounts(). SlowMist said the attacker then repeatedly deposited and withdrew funds while the Hypervisor contracts were working with inflated share values.

The security firm identified the attacker address as 0xaea29218262dc6b0904ca077f6527c49dfd426d9 and the attack contract as 0xb46655eb5b77de277063a75586d1883e951b6c54.

Two vulnerable contracts were listed as 0x85cbed523459b7f6f81c11e710df969703a8a70c and 0xc86b1e7fa86834cac1468937cdd53ba3ccbc1153, while the underlying liquidity pool was identified as 0xe8c2036068fc3b0161ee1def0e8d01df4eac0ac.

Float Protocol exploit relied on Uniswap V3 spot price manipulation

The attack centered on how the affected contracts obtained pricing information from the underlying Uniswap V3 pool. SlowMist said large trades allowed the attacker to distort slot0, which contains the pool’s current price and tick information.

Once the pool price had been moved, the manipulation changed the values returned by currentTick() and getTotalAmounts(). The affected Hypervisor contracts used the altered data to calculate LP share values, which allowed the attacker to interact with the contracts while those shares were incorrectly priced.

Flash loans supplied the temporary capital needed to make the large trades. As crypto.news previously explained, a flash loan allows assets to be borrowed without upfront collateral as long as the loan and fees are repaid within the same blockchain transaction.

If repayment does not occur, the entire transaction reverts. The mechanism allows traders to access large amounts of temporary liquidity for arbitrage, collateral swaps and liquidations, but the same liquidity can be used to exploit vulnerable pricing or smart contract logic.

In its analysis of Float Protocol, SlowMist attributed the loss to the contracts relying on a manipulable spot price without checks that could verify it against a time weighted average price or another oracle. Critical functions lacked slippage protection as well, according to the security firm.

Attacker repeatedly used inflated LP share values

SlowMist said the attacker did not stop after changing the Uniswap V3 pool price. Once slot0 had been distorted, the attacker repeatedly deposited into and withdrew from the affected contracts using the inflated LP share calculations.

The sequence allowed value to be extracted while the contracts were relying on the manipulated pool state. SlowMist estimated the final loss at approximately 10.71 ETH, worth about $28,000 when it published the alert.

Similar methods have been used in other DeFi attacks where large temporary trades distort prices or pool ratios before another contract uses the manipulated values.

In July, Allbridge Core was halted after an attacker used a $1.12 million USDC flash loan from Kamino during an exploit that PeckShield estimated caused about $1.65 million in losses.

Onchain Lens said the Allbridge attacker made rapid USDC and USDT swaps to change the ratio inside a stablecoin pool. The attacker then withdrew liquidity at the distorted rate before repaying the flash loan in the same transaction.

Allbridge said some liquidity pools were left temporarily out of balance after the incident and asked users who had profited from unusual pricing to consider returning the funds. The protocol paused Core while investigators tracked assets that had been moved from Solana to Ethereum.

Price data has remained a target in DeFi attacks

Another July incident showed how manipulated pricing information can be used even when the weakness sits outside a protocol’s smart contracts.

Ostium concluded that its $23.75 million USDC exploit originated from compromised off-chain infrastructure. The decentralized trading protocol said an attacker submitted fraudulent BTC/USD price reports that allowed funds to be drained from its OLP liquidity vault.

Ostium said its smart contracts were not the source of that breach. Automated monitoring detected the attack, trading resumed on July 23, and the protocol reported that user collateral had not been affected.

Float Protocol’s incident involved a different mechanism described by SlowMist. The security firm’s analysis placed the weakness inside the affected Hypervisor contracts, where manipulated Uniswap V3 pool data could influence the calculations used to value LP shares.

Flash-loan capital has featured in other attacks this year. A July attack against Swan Treasury used a PancakeSwap flash loan after a compromised off-chain signer key allowed an attacker to purchase STY tokens at a large discount.

The Swan Treasury exploit caused an estimated $625,000 loss. Security analysis found that forged claim and transfer signatures had been created with the protocol’s compromised signer key, allowing roughly 687,000 STY to be purchased at around a 100 times discount before being sold into the STY/USDT pool.

The flash loan supplied capital for the transaction, while investigators attributed the underlying vulnerability to the leaked signer key instead of the protocol’s signature verification logic.

SlowMist points to missing price checks in Float Protocol contracts

For Float Protocol, SlowMist specifically identified the absence of TWAP or oracle validation as part of the attack path.

A TWAP uses observations collected across a period instead of relying solely on the price available at one moment. Spot prices inside liquidity pools can move when a sufficiently large trade changes the ratio of assets, which was the mechanism SlowMist said the Float Protocol attacker exploited.

Crypto.news’ flash loan guide described price manipulation as one of the common ways temporary liquidity can be used against a vulnerable DeFi application. The report noted that the flash loan provides the capital for an attack while the exploitable weakness can lie in price oracles, governance systems or contract logic.

In Float Protocol’s case, SlowMist said large trades were used to distort the Uniswap V3 pool’s slot0 value, which in turn changed currentTick() and getTotalAmounts(). The attacker repeatedly deposited and withdrew while the affected Hypervisor contracts calculated inflated LP share values, resulting in an estimated loss of 10.71 ETH.