WOOFi's synthetic proactive market making (sPMM) algorithm was exploited on Arbitrum to manipulate WOO token prices on WOOFi Swaps. The exploiter was able to borrow WOO tokens via flash loans and sell them at extremely low prices set by the flawed sPMM, before buying them back at very low cost. This netted the exploiter $8.75m in profits.
Teams like Hypernative and Chainalysis quickly spotted the exploit. WOOFi has paused smart contracts and began an investigation, offering a 10% bounty to the exploiter. They aim to resolve issues and redeploy an improved WOOFi Swap in 2 weeks.
