Briefing
The Yearn Finance yETH Stableswap pool was compromised on November 30, 2025, via a sophisticated infinite token minting exploit, resulting in a loss of approximately $9 million in liquid staking assets. This attack leveraged a critical flaw in the pool’s custom accounting logic, specifically a failure to reset cached virtual balance variables ( packed_vbs ) after the pool’s total supply was drained to zero. The attacker successfully executed a three-stage manipulation, turning a minimal 16 wei deposit into 235 septillion LP tokens, thereby draining the entire pool’s holdings.
Context
The incident highlights the persistent risk associated with custom, gas-optimized smart contract implementations, particularly within the complex architecture of yield aggregators. Despite Yearn Finance’s status as a veteran protocol, the custom StableSwap code used for the yETH pool → which caches values to reduce transaction costs → introduced a non-standard attack surface that was not fully mitigated by prior audits. This pre-existing condition of code fragility in a high-value, composable asset pool was the primary vulnerability.
Analysis
The attack chain began with the attacker using flash-loaned funds to perform multiple deposit-and-withdrawal cycles, strategically accumulating non-zero residual values in the packed_vbs storage variables. Following a complete withdrawal that correctly reset the main supply counter to zero, the cached storage values remained populated with phantom balances. The final step involved a minuscule 16 wei deposit, which the contract’s “first deposit” logic misinterpreted by reading the accumulated phantom values from the cache. This miscalculation led to the minting of a near-infinite amount of LP tokens, allowing the attacker to withdraw all underlying assets from the pool.
Parameters
- Total Loss → ~$9 Million (The combined value drained from the yETH Stableswap pool and the Curve pool ).
- Attack Vector → Infinite Token Mint (Exploiting a cached storage logic flaw to mint 235 septillion LP tokens ).
- Vulnerable Component → yETH Stableswap Pool (A custom contract logic, unrelated to Yearn V2/V3 vaults ).
- Laundering Method → Tornado Cash (~$3 million in ETH sent to the mixer ).
Outlook
Protocols leveraging complex, gas-optimized accounting logic must immediately review all functions that rely on cached state variables, ensuring a complete and atomic reset upon total liquidity withdrawal. The incident necessitates a new auditing standard focused on state management integrity, particularly for StableSwap forks and custom vault implementations where the first-deposit logic can be manipulated by residual storage values. For users, this reinforces the need to monitor and diversify exposure to custom, single-asset pools, even within established ecosystems.
Verdict
The Yearn yETH exploit is a critical demonstration of how subtle, gas-saving optimizations in custom DeFi logic can introduce catastrophic state-manipulation vulnerabilities, proving that code-level integrity remains the ultimate security perimeter.
