One call. Infinite drains. Billions lost. Reentrancy attacks don’t knock—they loop. And when they do? Your smart contract bleeds until it’s empty.
Ethereum revolutionized blockchain by introducing smart contracts and enabling decentralized applications (dApps) via the Ethereum Virtual Machine (EVM). However, with the rise of programmable contracts came new vulnerabilities—among them, one of the earliest and most notorious: the reentrancy attack.
Despite being well-documented since 2016, reentrancy attacks continue to pose serious risks to smart contract security. This document provides a comprehensive explanation of how they work, notable historical examples, their variants, and why they remain relevant.
What Is a Reentrancy Attack?
A reentrancy attack occurs when a malicious contract repeatedly invokes a vulnerable function (often a withdrawal function) in a target smart contract before the target can update its internal state—such as deducting a user’s balance. This creates a loop that allows the attacker to drain funds multiple times in a single transaction.
In simple terms: The contract allows a second withdrawal before it finishes updating the record of the first. This is akin to allowing a bank customer to withdraw money repeatedly before the system notices the account is empty.
Are Reentrancy Attacks Still a Threat?
Yes. While many assume reentrancy vulnerabilities are outdated, they remain a frequent attack vector. In the first half of 2023, 4 out of 24 major Web3 hacks exploited reentrancy.
Their simplicity, profitability, and persistence in poorly audited codebases make them a recurring threat, especially in rapidly developed or cloned DeFi projects.
Historical Example: The DAO Hack (2016)
The most infamous instance of a reentrancy attack occurred during the DAO Hack in 2016, where approximately $60 million in ETH was stolen.
The vulnerability exploited the DAO’s recursive call structure. The attacker repeatedly called the withdrawal function before the DAO could update its balance records, draining funds in a loop.
Consequences included:
A hard fork of the Ethereum blockchain.
Reputational damage to the entire ecosystem.
Heightened scrutiny of smart contract security practices.
Other Notable Exploits
• Uniswap and Lendf.Me (2020): Each lost over $25 million due to reentrancy issues.
• Cream Finance (2021): Suffered an $18.8 million loss.
• BurgerSwap (2021): Exploited for $7.2 million.
• Siren Protocol: Lost $3.5 million due to automated market maker (AMM) pool manipulation.
• SURGEBNB: Experienced a $4 million exploit via price manipulation and reentrancy logic.
How a Reentrancy Attack Works: Step-by-Step
1. Deposit – The attacker’s contract deposits a small amount of funds into a vulnerable contract.
2. Withdraw Request – The attacker initiates a withdrawal.
3. Callback Triggered – Before the withdrawal completes and internal balances are updated, the attacker’s contract executes a callback.
4. Repeat Call – The callback reinvokes the withdrawal function.
5. Loop – The process repeats, draining funds before the contract recognizes the initial withdrawal.
This sequence succeeds when the contract sends funds before updating the user’s balance, violating the principle of checks-effects-interactions.
A Real-World Analogy
Imagine a bank that processes withdrawals but doesn’t update account balances until the end of the day. A customer withdraws $5,000, then walks back to the teller and withdraws again—and again—before the system realizes the account is empty. By the time the bank reviews its records, the vault is drained.
This mirrors how reentrancy attacks abuse delayed state updates.
Types of Reentrancy Attacks
1. Single-function Reentrancy
Occurs when the same function is recursively called before the contract updates its internal state. This is the most direct and well-known form.
2. Cross-function Reentrancy
Involves one function invoking another that shares vulnerable state variables, allowing the attacker to exploit inconsistent internal data through multiple entry points.
3. Cross-contract Reentrancy
Takes place when multiple contracts share access to the same vulnerable state. The attacker cycles between contracts mid-execution to exploit shared logic or storage.
Additional High-Profile Cases
1. WETH (pre-DAO): The exploit was orchestrated to highlight a vulnerability and safeguard the project.
2. Fei Protocol: Combined flash loans and reentrancy to compromise funds.
3. Revest Finance: Lost $2 million through cross-function reentrancy, exploiting interconnected function logic.
Why This Still Matters
Smart contracts today secure billions of dollars across DeFi platforms, DAOs, NFT marketplaces, and staking protocols. A single overlooked reentrancy bug can compromise the integrity of an entire ecosystem.
Even users who don’t write smart contracts are at risk, as compromised dApps can lead to frozen funds, lost tokens, or reputational fallout across the entire network.
Conclusion
Reentrancy attacks remain a top-tier threat in Web3 security. Despite being one of the oldest known smart contract vulnerabilities, they are far from obsolete. Developers must design with caution, conduct thorough audits, and apply best practices like the Checks-Effects-Interactions pattern and reentrancy guards.
In blockchain, even a legacy flaw can result in catastrophic loss. Vigilance is not optional—it’s critical.
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