Polygon-Based DeFi Platform QuickSwap Closes Lending Service Following Exploit

Polygon-based decentralized finance platform QuickSwap closed its lending services for users following a flash loans exploit for over $220,000 worth of tokens on Monday.

Blockchain data shows the attackers manipulated token prices by borrowing funds using a flash loan – a form of unsecured lending – and then used the inflated values as collateral to drain all liquidity from the affected QuickSwap pool. Stolen tokens including MATIC, Lido’s LDO and staked MATIC were exchanged for other tokens on privacy mixer Tornado Cash on Monday afternoon, data show.

"QuickSwap Lend is closing," the company said in a tweet. "$220k was exploited in a flash loans attack due to a vulnerability with the Curve Oracle, which @marketxyz was using."

Flash loans are provided by some decentralized finance (DeFi) networks and do not require a borrower to post collateral as long as the loan is paid back in the same transaction.

QuickSwap initially pinned the exploit on a vulnerability with the Market XYZ platform, which it said used faulty oracles from DeFi protocol Curve and stablecoin issuer QiDao. Oracles are services that fetch data from external sources and provide information to any blockchain network. QiDao said the exploit was unrelated to its smart contracts.

While QuickSwap said it would publish an update on the exploit on Monday, no further information had been released as of press time Tuesday.

The attack is the latest in a growing list of exploits this month, with October already the worst month ever for crypto attacks.