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Rodeo Finance, a DeFi protocol, seemingly fell victim to a flash loan attack on Tuesday, with the perpetrator making off with about 810 ether ($1.5 million) on the Arbitrum network, the latest in a series of decentralized finance (DeFi) exploits.

Blockchain security firm PeckShield, which initially detected the incident, conducted further analysis of on-chain data. Its analysis indicates that the attacker transferred the ill-gotten gains from Arbitrum to Ethereum. They then exchanged the stolen tokens for various other assets before converting them back to ether. The final stage of the exploit saw the ether being routed through Tornado Cash, a popular transaction mixer on the Ethereum network, effectively obfuscating the trail of funds.

Flash loans: A double-edged sword in DeFi

Flash loans are a peculiar feature in the DeFi space, offering loans that must be returned within the same transaction. Originally designed to facilitate arbitrage trading and improve capital efficiency, these mechanisms have unfortunately become tools for hackers who manipulate DeFi price data feeds, also known as oracles, to execute exploits.

The Rodeo Finance team has not yet issued a response or statement regarding the incident.

This exploit is not an isolated occurrence, rather it is part of a trend that has been plaguing the Arbitrum ecosystem over the past few months. In April, Sentiment, another DeFi protocol running on Arbitrum, lost $1 million to a hacker. This was followed by an even larger security breach in May, where the Jimbos protocol was stripped of a staggering $7.5 million.

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