yETH Exploit Drains Millions, Attacker Launders Funds Through Tornado Cash

A recent exploit targeting Yearn Finance’s yETH product resulted in the theft of millions of dollars in assets, followed by a series of transfers into Tornado Cash. Blockchain analytics show that roughly 3 million dollars worth of Ethereum was funneled into the mixer shortly after the attack. The incident highlights ongoing vulnerabilities in DeFi protocols and the persistent challenge of laundering stolen funds through privacy mixing services.

 

What Happened, The yETH Exploit and Stolen ETH Flows

The attack began when a malicious actor exploited an infinite mint vulnerability in yETH, which is a liquid staking token product operated by Yearn Finance. The flaw allowed the attacker to mint an effectively unlimited supply of yETH in a single transaction. With this artificially inflated supply, the attacker was able to drain liquidity pools that held real assets, including ETH and major liquid staking tokens.

Immediately after draining the pools, the attacker began moving stolen assets through multiple wallets. On chain activity shows that large transactions flowed directly into Tornado Cash. In total, about 1,000 ETH, roughly 2.8 million dollars in value, was pushed into the mixer as part of the laundering process.

The exploit appears to be isolated to the older yETH implementation, which relied on outdated token mechanics. Yearn Finance acknowledged the situation, stating on their official X account that "We are investigating an incident involving the yETH LST stableswap pool," and that users can feel secure that  "Yearn Vaults (both V2 and V3) are not affected.".

 

Why This Attack Is Significant

Infinite Mint Vulnerabilities Remain a Critical Threat

This type of exploit is one of the most catastrophic forms of smart contract failure. When a token’s supply can be arbitrarily increased, attackers can manipulate liquidity pools, redeem inflated assets and drain valuable tokens held by real users. Even established protocols with long track records can be exposed if older code is not continuously audited and updated.

Liquidity Pools Become Fragile Under Supply Manipulation

The integrity of liquidity pools depends entirely on predictable token behavior. When a token’s supply is altered outside expected rules, the pool’s balance collapses instantly. This creates massive losses for users who provided liquidity and may trigger wider liquidity crises across DeFi platforms that rely on interconnected pools.

Mixers Are Still the Tool of Choice for Laundering

The attacker quickly sent stolen ETH to Tornado Cash, which remains a primary method for obscuring stolen funds. Despite regulatory scrutiny and sanctions, mixers continue to attract hackers because they allow for rapid, high volume anonymization. This pattern is consistent with previous DeFi exploits and exchange hacks, where mixers are used almost immediately after funds are stolen.

 

A Pattern That Repeats Across DeFi

The combination of an exploit followed by a mixer transfer has become predictable. Major hacks from past years have shown the same behavior. An attacker identifies a flaw, drains assets, splits them among multiple wallets and launders them through a mixing protocol. This cycle reinforces two critical realities, DeFi is still highly vulnerable, and laundering infrastructure remains robust enough for attackers to operate with confidence.

Until more advanced detection systems, stronger audits and better economic modeling become the standard, similar vulnerabilities will continue to be exploited.

 

Implications for DeFi Security and Governance

Even reputable projects with long track records must prioritize frequent, thorough audits, especially for older token contracts. Legacy code is often the weakest link.

Mechanisms that detect abnormal supply changes, enforce withdrawal limits or restrict redemptions during anomalies should be incorporated into liquidity pool architecture. Economic safety modeling must complement smart contract audits.

DeFi users often underestimate the risk of providing liquidity or staking in complex protocols. No audit or reputation fully eliminates risk. Users must diversify exposure and treat yield opportunities with caution.

With Tornado Cash and similar services repeatedly used for laundering, regulators may push for more enforcement actions. This increases pressure on privacy tools, but it also highlights the need for decentralized privacy solutions that cannot be misused as easily.

 

Final Thoughts

The Yearn yETH exploit and subsequent laundering through Tornado Cash are the latest reminders that DeFi, while innovative, remains structurally fragile. As ecosystems grow more interconnected and protocol complexity increases, so does the risk of catastrophic failures.

For DeFi to become a trusted global financial system, it must adopt stronger audits, safer economic design and better user protections. Until then, the space will continue to experience painful setbacks where millions are lost and trust is shaken.

 

This incident reinforces a simple truth, decentralization does not remove the need for rigorous security. It amplifies it.

 

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Aerodrome Finance Front End Attack, Users Should Avoid Domains

 

On November 22, 2025, Aerodrome Finance publicly alerted its community that its front-end system had been compromised. Users were urged to avoid interacting with the official domain until further notice. The incident shines a light on not only the specific risks for Aerodrome but the evolving threat landscape that decentralized finance (DeFi) platforms face as they attract more assets and users.

Here is a detailed breakdown of the event, the immediate impact, the underlying vulnerabilities, and what users should do now.

 

What Happened at Aerodrome

Aerodrome, a prominent decentralized exchange (DEX) built on the Base network, discovered a malicious actor had gained control of elements of its front-end infrastructure. The team’s announcement stated that the system was under attack and users should avoid transactions until the issue is resolved.

Investigations and on-chain data suggest the following sequence:

• The attacker exploited the front-end system, possibly via a Domain Name System redirection or DNS hijack, leading users to a fake interface.

• Users connecting wallets and signing transactions through the compromised domain exposed themselves to malicious contract interactions, which allowed the attacker to drain wallets.

• On-chain sleuths identified two wallet addresses receiving stolen funds, with estimates of approximately $40,000 to $70,000 diverted from Aerodrome and related domains.

• Although the core smart contracts reportedly remained secure, the front-end compromise posed serious risk because users interacted with an interface that could initiate unauthorized transactions.

Analysts have pointed out that front-end attacks, while less dramatic than contract exploits, remain one of the most under-appreciated vectors in DeFi. This incident places Aerodrome in the spotlight and raises critical questions about user safety, domain management, and the trust model of DeFi.

 

What Aerodrome and the Community Are Doing

In response to the incident, Aerodrome has taken the following steps:

• Issued urgent advisories to users not to connect wallets or sign transactions on the affected domain.

• Provided a secure, decentralized interface alternative while full remediation is underway.

• Encouraged users to revoke all permissions granted within recent hours and monitor their wallet activity for unauthorized transactions.

• Launched an investigation with bug bounty and intelligence firms to trace the attacker and recover stolen assets.

• Secured its domain provider, locked the domain at the top-level domain (TLD), and initiated provider migration to avoid recurrence.

While the smart contracts remain uncompromised, the front-end risk highlights that all layers—the UI, domain infrastructure, wallet connection flow—must be protected.

 

What Users Should Do Now

If you used Aerodrome recently, please take these actions immediately:

 

1. Revoke Wallet Permissions
   Use your wallet or permissions dashboard (such as Etherscan’s token approvals) to remove any recently granted approvals for the Aerodrome front-end domain.

2. Avoid the Official Domain Until Verified
   Use only mirror or verified alternative interfaces provided directly by the team. Do not trust links in social media bios unless officially confirmed.

3. Monitor Transactions
   Check your wallet transaction history for suspicious outgoing transfers, token approvals or swap interactions you did not initiate.

4. Use a Hardware Wallet
   For any future DeFi interaction, especially involving large amounts, consider using wallets with hardware signing to reduce risk of rogue UI prompts.

5. Stay Updated
   Follow official Aerodrome channels for remediation updates and wait for confirmation that the front-end is secure before interacting again.

 

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Balancer Faces Over $110 Million in Outflows After Potential Exploit

The decentralized finance (DeFi) protocol Balancer is facing scrutiny after more than $110 million in assets were drained from its pools in what appears to be a large-scale exploit. Early reports surfaced from blockchain analysts, including @AdiFlips on X, who tracked the initial transactions and raised alarm over millions of dollars in outflows from Balancer’s smart contracts.

 

What Happened

Balancer’s smart contracts began showing suspicious transactions involving Wrapped Ether (WETH), Lido staked Ether (wstETH), and Origin staked Ether (osETH) on October 30. According to on-chain data shared by @AdiFlips, the transactions originated from Balancer’s “manageUserBalance” function, a part of its V2 smart contract system that handles user funds and pool accounting.

In just a few minutes, an unknown address moved more than $70 million worth of assets across multiple transactions. Follow-up analysis by several DeFi monitoring platforms later confirmed that total outflows exceeded $110 million, with funds being consolidated into a single wallet.

 

What the Analyst Found

On X, @AdiFlips posted the first thread highlighting the exploit, noting that the “manageUserBalance” function was being abused. He showed that the attacker was able to call the function in a way that bypassed standard permission checks, allowing them to drain funds from liquidity pools without ownership validation.

In his breakdown, he wrote:

“It looks like the Balancer exploit is real. Someone managed to bypass msg.sender validation in the manageUserBalance function, allowing them to transfer tokens directly. Funds are being drained quickly.”

His real-time tracking of the attacker’s wallet provided the first public warning to liquidity providers (LPs), prompting many to start pulling funds before further losses.

 

Balancer’s Response

Balancer confirmed the issue shortly after the exploit began, posting an update on X:

“We are aware of a potential exploit impacting Balancer V2 pools. Our engineering and security teams are investigating with high priority.”

The team said it has contacted major blockchain security groups and forensic analysts to trace the funds and assess the exploit’s scope. Balancer has also offered a 20% white-hat bounty for the return of the stolen assets, promising leniency if the attacker cooperates.

If the funds are not returned within 48 hours, Balancer stated it would pursue the matter through law enforcement and deeper blockchain forensics, including cross-referencing IP, ASN, and timestamp data linked to on-chain activity.

 

How the Exploit Worked

Preliminary technical analysis suggests the attacker exploited a logic flaw in Balancer’s contract validation process. Specifically, they were able to manipulate the manageUserBalance function, which is responsible for handling deposits and withdrawals.

Normally, the function should only execute balance changes initiated by the user calling the transaction. However, a missing or incorrect sender check may have allowed the attacker to impersonate users and withdraw assets from shared liquidity pools.

This kind of bug falls under the category of access control vulnerabilities, a recurring issue in complex DeFi protocols that handle multiple users’ funds through permissioned functions.

 

Impact on Users

The exploit affects liquidity providers (LPs) participating in Balancer V2 pools, particularly those containing wrapped and staked Ethereum assets. If you are a Balancer LP, you should:

• Check your wallet and pool exposure immediately.

• Exit vulnerable pools until Balancer issues a full post-mortem.

• Avoid interacting with any unverified Balancer contracts during the investigation period.

Balancer has not yet confirmed whether all funds can be recovered, but the incident has already shaken confidence in one of DeFi’s longest-running automated market makers.

 

Industry Reaction

The broader DeFi community reacted quickly. Security researchers and analysts echoed @AdiFlips’ findings, noting that the exploit underscores a recurring challenge in smart contract design. Small logic errors in permission validation can lead to massive financial losses.

Developers from other major protocols, including Curve and Uniswap, have reportedly reviewed similar functions in their contracts to ensure they are not exposed to the same vulnerability.

Meanwhile, crypto security firms have begun tracking the attacker’s wallet movements, which show small transfers through decentralized exchanges, possibly testing laundering routes or trying to break traceability before moving funds to privacy protocols.

 

Why This Matters

Balancer’s exploit is not just another DeFi hack. It is a reminder that code complexity equals risk, even for mature platforms. Balancer has handled billions in total value locked (TVL) since launching in 2020, making this one of the largest potential breaches in its history.

The event highlights three broader trends in DeFi:

1. Smart contract logic flaws remain a top vulnerability, even after audits.

2. Real-time community alerts like those from @AdiFlips play a crucial role in limiting damage.

3. Protocol accountability and transparency are now as important as code security itself.

 

What Happens Next

Balancer’s team is expected to publish a full incident report once its investigation concludes. They will likely propose governance measures to patch affected contracts and possibly establish compensation paths for liquidity providers who lost funds.

For now, on-chain watchers continue to track the exploiter wallet, which still holds tens of millions in Ether and related assets. Whether this turns into a partial recovery or another unsolved multimillion-dollar DeFi theft remains to be seen.

 

Final Thoughts

This exploit shows that even well-established DeFi protocols remain vulnerable to subtle design flaws. While Balancer’s prompt communication and bounty offer were commendable, the event reinforces the need for constant contract monitoring, active audits, and responsible disclosure systems across the sector.

 

For users, the lesson is simple: DeFi rewards innovation, but it still carries risk. Stay alert, follow verified analyst updates, and never assume any protocol is too established to be exploited.

 

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You can stay up to date on all News, Events, and Marketing of Rare Network, including Rare Evo: America’s Premier Blockchain Conference, happening  July 28th-31st, 2026 at The ARIA Resort & Casino, by following our socials on X, LinkedIn, and YouTube.