Arbitrum-based Rodeo Finance loses $888,000 in latest DeFi exploit: PeckShield

The Rodeo Finance team has not yet issued a response or statement regarding the incident.

Complex maneuvers like these have over the last few years become tools for hackers who manipulate oracle price data feeds to execute exploits, as seen in the case of Rodeo Finance. The Rodeo exploit is not an isolated occurrence, rather it is part of a trend that has been plaguing the Arbitrum ecosystem over the past few months.

The firm said there was a critical flaw in Rodeo Finance’s “Investor.earn” routine, designed to swap USDC for wrapped ether and then for another liquid staking token called unshETH. The anticipated slippage control, meant to prevent excessive price deviation during a transaction, did not function correctly due to an erroneous unshETH price oracle.

Further exacerbating the situation was the significant discrepancy between the oracle-reported unshETH price and its expected value. The oracle cited the price of unshETH at $4219, whereas its typical rate compared to WETH should have placed it around $1880. This discrepancy facilitated the hacker’s ability to manipulate trades, profiting from a system loophole while the protocol’s slippage controls failed to intervene.

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