Moonwell Hacker Nets $6M by Inflating Token Price

A recent attack on Moonwell, a decentralized finance (DeFi) lending protocol built on Base and Optimism networks, has resulted in the theft of approximately $6 million. The attacker artificially inflated the price of the MAMO token, using it as collateral to borrow $10 million in other assets, such as cbBTC, USDC, WETH, and wstETH.

The attack unfolded when the attacker purchased around $7 million worth of MAMO tokens, driving up their price. These tokens were then deposited on Moonwell as collateral. With this collateral, the attacker borrowed the mentioned assets, totaling approximately $10 million. After securing the borrowed assets, the attacker sold the remaining MAMO tokens for about $3.2 million.

The overall extraction is estimated at about $6 million when accounting for the borrowed funds. This incident highlights a persistent vulnerability in DeFi lending protocols: the reliance on price oracles and the potential for manipulation of low-liquidity tokens.