Blockchain security and auditing company Quantstamp has introduced the Economic Exploit Analysis tool, designed to detect potential flash loan attack vulnerabilities within smart contracts before any security breaches occur.
Quantstamp's newly launched tool scans protocol software code for vulnerabilities that could be exploited by flash loan attacks.
Collaborating with the University of Toronto, the company transformed its academic research into a practical tool.
The tool's scope isn't restricted to a single contract or client.
It enables auditors to assess multiple contracts from integrated DeFi (Decentralized Finance) protocols.
However, while the search process is automated, certain manual adjustments are necessary for protocol-specific contexts.
The tool does not guarantee the identification of all vulnerabilities.
How Do Flash Loan Attacks Work?
Flash loan-based attacks pose a substantial threat in the DeFi landscape, with the Euler Finance exploit alone causing losses of approximately $200 million in March.
Flash loans attract attackers by granting them access to uncollateralized funds that can manipulate DeFi protocols.
Yet, the borrowers must repay within the same transaction, introducing considerable risk.
The complexity of these attacks often enables them to bypass standard code audits, facilitating potential exploits.
Quantstamp's Head of New Initiatives, Martin Derka, stated:
"DeFi's potential to revolutionize global finance necessitates proactive defense against threats like flash loan attacks. This tool bolsters security for DeFi protocols beyond traditional audits.
As DeFi evolves, security measures must evolve alongside it. Economic Exploit Analysis offers a vital advantage against hackers."