On May 22, 2025, Cetus Protocol — a concentrated liquidity AMM on the Sui and Aptos ecosystems — suffered a major exploit resulting in an estimated loss of $223 million, making it one of the largest hacks in DeFi history to date.
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1. Technical Cause – Integer Overflow
According to the project’s official explanation, the exploit was due to a logic error in the code, specifically an integer overflow in the liquidity calculation function:
Cetus used a checked_shlw (shift left word) operation to process internal AMM math.
The function only validated 64-bit limits, while real data could exceed 192 bits.
This oversight led to silent overflows, producing incorrect results without triggering errors.
The attacker exploited this to trick the system into calculating fewer required tokens for adding liquidity, and received more tokens than what was actually provided.
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2. Exploit Execution
The attacker used a flash loan to borrow assets without collateral within a single transaction.
They created a fake liquidity position in a very narrow price range (300000–300200) to maximize calculation errors.
The protocol miscalculated the liquidity inputs, allowing the attacker to withdraw significantly more tokens than deposited, while repaying the flash loan instantly — profiting from the arbitrage.
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3. Damage and Response
Total loss: Estimated at $223 million (according to Cetus team).
Recovered funds: Around $162 million has been retrieved.
Immediate actions: Cetus paused liquidity-related functions to contain further losses.
The team is working with third-party security experts, infrastructure providers, and potentially legal entities to assess and address the situation.
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4. Market Impact
The CETUS token experienced a sharp price drop following the incident.
Liquidity across many pairs on Cetus was withdrawn as users panicked.
Several integrated DApps temporarily halted services due to reliance on Cetus liquidity.
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5. Key Observations
The bug was internal logic, not related to bridges or oracles.
All technical details so far come from the Cetus team — no independent audit report has confirmed them yet.
The exploit highlights how basic math operations in smart contracts, especially with bit manipulation, can be dangerous if not rigorously tested.
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6. Conclusion
The Cetus Protocol hack serves as a critical reminder that even a seemingly small arithmetic bug can cause catastrophic loss in DeFi. Key takeaways:
Security audits are not sufficient without robust logic and boundary testing.
Flash loans remain powerful but risky tools that must be designed against abuse.
Users should stay informed and understand at least basic DeFi mechanics to protect themselves in high-risk environments.