Attacks exploiting errors in a DeFi protocol’s code caused 55% of flash loan losses from February 2022 to July 2024, according to a paper published in the Journal of Financial Crime. Their share was 28% over the prior two years, and the jump put them ahead of price feed manipulation attacks.
The study was written by Tim Hall, professor at the department of policing and criminology at the University of Winchester, and Remo Stieger, ex-partner at SyntiFi Risk Intelligence. Between February 2020 and July 2024, they recorded 72 flash loan attacks with a total loss of $1.211 billion.
Four attack types caused over 81% of the damage
A flash loan lets a borrower take uncollateralized crypto, provided it is paid back before the same blockchain transaction ends. There’s nothing illegal about that, but it gives the attacker the capital to run an exploit with no risk to themselves.
