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Security Incident · ETH Ecosystem

Chi Protocol Smart Contract Logic Vulnerability: $8.50K Reported Loss

·Historical incident record

Incident Overview

Chi Protocol (a DeFi stablecoin protocol issuing $USC backed by LSTs/LRTs on Ethereum) was exploited due to a logic error in the ArbitrageV5 contract’s burn() function. The attacker used a flash loan to buy heavily depegged $USC cheaply on a thin Uniswap V2 pool and burned it to redeem full-value collateral (weETH/stETH/WETH) at the hardcoded $1 peg, without the burn function checking the actual peg (unlike the mint function). This resulted in approximately $8,500 loss, nearly draining the protocol’s reserves.

Sources & References

Original incident referencehttps://x.com/DefimonAlerts/status/2076887008773829119 (opens in a new tab)

This record presents information attributed to the linked sources. Incident dates describe the original event, not a new report. Reported loss figures reflect the source record and are not current market valuations.

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