Zoth's Restaking Protocol Suffers $8.4m Loss Due to Cryptocurrency Hack

An Ethereum-based platform for real-world assets, Zoth, has been exploited for $8.85 million after unauthorized access to a private key was obtained by attackers.

This security breach is the second major incident for Zoth within a month, emphasizing the persistent vulnerabilities in DeFi protocols.

The attacker reportedly infiltrated the protocol's deployer wallet, enabling them to upgrade the "USD0PPSubVaultUpgradeable" proxy contract to a contract controlled by them.

This tactic facilitated the withdrawal of $8.4 million in Zoth's USD0++ stablecoin, which was promptly swapped for 8.3 million DAI and transferred to an external address.

Zoth has temporarily put its website into maintenance mode and is collaborating with security partners to evaluate the damage and prevent additional exploits.

Hack of the proxy contract

Proxy contracts, which are commonly used in DeFi for upgradability, present a risk when the private keys safeguarding them are compromised. The unauthorized upgrade in Zoth's case illustrates how attackers can manipulate contract logic to divert funds without obstruction.

This incident comes after a March 6 exploit in which Zoth lost $285,000 due to a vulnerability in the liquidity pool. Recurring security failures raise doubts about the platform's risk management and may attract regulatory scrutiny.