Allbridge, a cross-chain bridge protocol in Decentralized Finance (DeFi), has suspended protocol operations after a security incident affected liquidity pools on Solana. The company halted services as a precaution while its team reviews transaction data and investigates the breach. It also urged liquidity providers with funds in affected pools to withdraw their assets until further notice.
Allbridge confirmed the disruption in a post on X (formerly Twitter), stating:
“Allbridge Core is experiencing a security incident. We have paused the protocol as a precaution while we investigate. If you have liquidity in affected pools, please withdraw now.”
Blockchain security firm PeckShield estimated losses from the incident at about $1.65 million. Initial findings showed the stolen assets were transferred from Solana to Ethereum after the exploit. The funds were later routed into privacy pools, making tracking efforts more difficult for investigators.
Flash Loan Used to Distort Pool Balance
Onchain Lens reported that the attacker began the operation with a $1.12 million USDC flash loan from Kamino. Rapid USDC and USDT swaps altered the price ratio in the Allbridge Core stablecoin pool, creating an imbalance that allowed liquidity withdrawals at manipulated rates.
After completing the withdrawals, the attacker repaid the entire $1.12 million flash loan and kept the remaining funds as profit. Allbridge later acknowledged that the pool imbalance opened a temporary arbitrage opportunity during the attack.
The company requested voluntary returns from anyone who benefited from temporary pricing differences so recovered funds could help reimburse affected liquidity providers while the investigation continues.
Flash Loan Exploit Previously Hit Allbridge
The latest incident marks another attack against Allbridge Core. A flash loan exploit targeted a liquidity pool on BNB Chain in April 2023, causing losses of about $573,000 for the platform. During the attack, the exploiter acted as both a liquidity provider and a swapper before manipulating swap prices through a smart contract flaw.
The previous breach resulted in losses of about $289,900 in BUSD and roughly $290,900 in USDT. The incident showed a similar use of flash loan methods to extract funds from protocol liquidity.
Cross-Chain Bridge Attacks Continue Since May
The Allbridge incident is at least the sixth attack targeting a cross-chain bridge since May. In June, Taiko advised users to withdraw assets after attackers stole about $1.7 million from one of its bridge protocols.
Another bridge-related breach affected Secret Network after an “infinite mint” bug created unbacked Axelar-wrapped assets. Blockchain research firm Common Prefix reported losses of about $4.67 million following activity linked to a failed cross-chain transaction on June 10.
Recent incidents have also added pressure on Solana-based decentralized finance projects. DeFiTuna recently lost about $580,000, while earlier attacks also affected Drift and Step Finance. Solana’s network continued operating throughout each incident, while security failures occurred in applications and bridge infrastructure built on top of the blockchain.
