Stablecoin project Origin Dollar (OUSD) sustained a re-entrancy attack at 00:47 UTC Tuesday resulting in a loss of funds worth $7 million, including over $1 million deposited by Origin and its founders and employees.
The team has disabled deposits and the price of the project’s native token is down 85% since the attack, according to CoinGecko.
Origin urged people not to buy OUSD on Uniswap or SushiSwap as those prices don’t reflect the token’s underlying assets. As CoinDesk reported in September, OUSD is backed by deposits of USDT, USDC and DAI and is designed to act somewhat like a savings account.
Tuesday’s attack utilized a flash loan and flaws in OUSD contracts to initiate what is known as a “rebase,” according to Etherscan and an updated blog from the team. The attack artificially inflated the supply of OUSD tokens within the protocol before swapping the newly printed tokens on SushiSwap and Uniswap for USDT, the blog states.
Origin wrote in an update:
“The attacker was able to create a rebase event inside the second mint after funds had moved to OUSD from the first large mint, but before the supply of OUSD increased. This created a massive rebase for everyone in the contract, including the attacker. The attacker then also received their first large OUSD mint, giving them in total more OUSD than the contract had assets.”
Early reports indicated that Origin Protocol had suffered a $3.5 million flash loan attack or pricing oracle attack. Although the attacker employed a flash loan, Origin has not cited oracle manipulation as the technical culprit.
“This has been a rough day for everyone involved, but we’re not going anywhere. We’re still here and will be working to rebuild,” Origin Protocol co-founder Josh Fraser told CoinDesk in an email at 06:16 UTC, adding:
“We’ll be continuing to post updates with our community as we learn more. We want to express our gratitude to the community for the outpouring of support. We ask for continued patience as we work to recover the funds and make things right.”