Sonne Finance Hit by $20 Million Exploit, Suspends Markets on Optimism

Sonne Finance, a decentralized lending protocol, suffered a $20 million exploit on Wednesday morning in Asia due to a vulnerability in Compound v2 forks, which Sonne is based on.

According to a post-mortem report, the attacker utilized a "donation attack" to exploit the protocol, resulting in significant losses. In response, Sonne Finance announced on X that it had paused all markets on the Optimism network, although markets on the Base network remain active.

The security breach was highlighted by blockchain security firm PeckShield, which advised Sonne Finance to review their timelock contract. The Sonne Finance team became aware of the exploit 25 minutes after it occurred.

The post-mortem report revealed that the team had recently approved a proposal to add VELO markets to Sonne. "We scheduled the transactions on a multisig wallet with a 2-day timelock and set c-factors to be executed after the 2-day period," the team explained. The attacker exploited this by executing four transactions when the timelock expired, subsequently adding the c-factor to the markets.

While recovering the stolen funds seems unlikely, Sonne Finance is actively investigating the attacker's identity and has offered a bounty for the return of the funds.

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