UwU Lend has fallen victim to yet another devastating exploit, with hackers making off with an additional $3.5 million just as the protocol was in the midst of reimbursing victims from a previous $20 million hack.

The exploit, detected by onchain data analytics platform Cyvers, reveals that the same attackers responsible for the initial breach on June 10th have struck again. This time, the attackers targeted various asset pools including uDAI, uWETH, uLUSD, uFRAX, uCRVUSD, and uUSDT. All stolen assets, totaling $3.5 million, were swiftly converted into Ether (ETH) and transferred to the attacker's address: 0x841dDf093f5188989fA1524e7B893de64B421f47.

The initial breach was triggered by price manipulation tactics. Using a flash loan, the attackers manipulated the prices of Ethena USDe (USDE) and Ethena Staked USDe (SUSDE), causing significant fluctuations. Subsequently, they exploited vulnerabilities in UwU Lend's protocol to borrow and lend tokens beyond expected limits, ultimately siphoning nearly $20 million in assets, all of which were converted into ETH.

UwU Lend had recently begun the reimbursement process for victims of the first exploit, having repaid all bad debt in the Wrapped Ether (wETH) market, amounting to 481.36 wETH valued at over $1.7 million. In total, the protocol had reimbursed over $9.7 million to affected users.

The protocol initially identified the vulnerability linked to the USDe market oracle as the root cause of the exploit. According to UwU, this vulnerability was promptly addressed, and subsequent reviews by industry professionals and auditors confirmed no further issues across other markets.

However, crypto security firm CertiK clarified to Cointelegraph that the ongoing exploit is a consequence of the previous breach rather than the same vulnerability being exploited again. CertiK explained that the attackers retained a significant amount of sUSDE tokens from the first hack, which were still considered legitimate collateral by the protocol. This oversight enabled the attackers to continue exploiting vulnerabilities in UwU Lend, draining additional pools despite the protocol being paused.

The recurrence of the exploit underscores the challenges faced by decentralized finance platforms in maintaining robust security measures amidst sophisticated attacks. UwU Lend and its stakeholders now face the daunting task of shoring up defenses and mitigating further risks to restore confidence in their platform's security and resilience.