SIR.trading Hack Wipes Out $355K in First Dencun Exploit

Key Points

• SIR.trading Hack Wipes Out $355K in First Dencun Exploit
• Entire $355K TVL lost in a single attack
• Exploit tied to Ethereum’s new transient storage
• Hack targeted a callback in a vulnerable vault contract
• Suspected first real-world exploit post-Dencun upgrade

Ethereum-based DeFi protocol SIR.trading, short for Synthetics Implemented Right, suffered a devastating blow on March 30, losing its entire $355,000 total value locked (TVL) in a single exploit. The platform, which aimed to provide “safer leverage” trading, now faces serious doubts about its future.

🚨TenArmor Security Alert🚨

Our system has detected a suspicious attack involving #SIR.trading @leveragesir on #ETH, resulting in an approximately loss of $353.8K.

The stolen funds have been deposited into RailGun.

Attack transaction: https://t.co/W5SRnzKjDF… pic.twitter.com/e1OOQoKbhz

— TenArmorAlert (@TenArmorAlert) March 30, 2025

Security researchers TenArmorAlert and Decurity first flagged the breach, revealing that the hack was not just a simple coding error — it could represent the first real-world attack leveraging a vulnerability in Ethereum’s Dencun hard fork, particularly in the transient storage feature.

The founder of SIR.trading, known pseudonymously as Xatarrer, called it “the worst news a protocol could receive.” Despite the major setback, the team appears committed to continuing development. But with the platform’s funds completely drained and user trust shaken, recovery won’t be easy.

Synthetics Implemented Right @leveragesir has been hacked for $355k

This is a clever attack. In the vulnerable contract Vault (https://t.co/RycDbFY5Xq) there is a uniswapV3SwapCallback function that uses transient storage to verify the caller. Specifically, it loads an address… pic.twitter.com/u6PhksPV31

— Decurity (@DecurityHQ) March 30, 2025

This exploit follows a string of events that highlight growing concerns in the DeFi ecosystem. From the Ethereum investment narrative being questioned to broader calls for more security in crypto systems, the pressure is on developers to tighten their protocols before adoption.

Transient storage exploited in clever callback attack

The attacker took advantage of a callback function in SIR.trading’s Vault contract, a core part of how the protocol handles leveraged trades. The vulnerability came from how the protocol implemented Ethereum’s transient storage, a feature added in the Dencun upgrade.

Transient storage is meant to reduce gas fees by temporarily storing data, making transactions cheaper. However, its short-term nature can introduce critical security gaps if not properly handled.

So we go the worst news a protocol could received and got hacked for our entire TVL ($355k).

I (@Xatarrer) would like to not throw the towel here as I truly believe in SIR.

If you also believe in the core protocol and have any idea on how to proceed forward, please DM. https://t.co/FD6QxwfXP4

— SIR.trading (🦍^🎩) (@leveragesir) March 30, 2025

Here’s how the attacker pulled off the exploit:

• The Vault contract had a callback function that was supposed to interact with a Uniswap pool.

• The attacker cleverly replaced the real Uniswap pool address with one they controlled.

• When the contract called the function, the attacker redirected the funds to their own address.

• By repeating the callback multiple times, they were able to completely drain the protocol’s TVL.

According to blockchain researcher SupLabsYi from Supremacy, this may be the first time transient storage has been exploited in the wild. “This isn’t merely a threat aimed at a single instance of uniswapV3SwapCallback,” he said, hinting that other DeFi protocols could be at risk if they’ve also adopted this feature.

Synthetics Implemented Right @leveragesir has been hacked for $355k

This is a clever attack. In the vulnerable contract Vault (https://t.co/RycDbFY5Xq) there is a uniswapV3SwapCallback function that uses transient storage to verify the caller. Specifically, it loads an address… pic.twitter.com/u6PhksPV31

— Decurity (@DecurityHQ) March 30, 2025

As Ethereum developers reflect on this incident, it adds to the broader discussion around how quickly new features should be adopted. Dencun was celebrated for its scalability upgrades, but as we’ve seen, innovation without caution can backfire.

This is particularly relevant in the context of increased regulatory interest. For example, California’s bold Bitcoin rights bill is aiming to define crypto user protections — and cases like SIR.trading show why that might be urgently needed.

Where the funds went and what happens next

After draining the $355,000, the attacker moved the funds through Railgun, a privacy protocol on Ethereum that makes tracking transactions difficult. SIR.trading’s founder, Xatarrer, has since reached out to Railgun for assistance in identifying or freezing the stolen funds, but no recovery has been confirmed yet.

This event also shines a light on the importance of smart contract audits, and their limitations. SIR.trading had been audited and even warned users in its documentation that its vault contracts might contain complex bugs. Unfortunately, those warnings turned out to be true.

The protocol’s goal was to offer safer leveraged trading, aiming to reduce volatility decay and liquidation risks for long-term users. However, the attack demonstrates that audits aren’t foolproof, especially when new, experimental features are involved.

The incident may also influence how other DeFi and CeFi platforms handle smart contract vulnerabilities. As highlighted in the Binance and Gemini data leak, security lapses in crypto are becoming increasingly common, whether through code or user data breaches.

What this means for the DeFi community

The SIR.trading hack serves as a wake-up call for developers and users alike. It underlines the risks of:

• Using new features (like transient storage) without thorough testing

• Overreliance on audits without stress-testing edge cases

• Limited incident response options once funds are stolen

And it’s not just about code — it’s about timing and adoption. As the DeFi ecosystem matures, there’s pressure to innovate quickly to stay ahead. But the faster the rollout, the greater the chance something breaks. This raises the question: Should developers delay integrating new Ethereum features until they’ve been fully vetted in the wild?

Meanwhile, stories like this are likely to fuel discussions in political and social circles. As we’ve seen with rising pro-Bitcoin sentiments — like Bukele and Trump’s Bitcoin-friendly stance — security and transparency will become key factors in public and governmental trust.

With the DeFi space still evolving rapidly, one thing is clear: protocols need to prepare not just for what’s possible but for what’s probable. As more complex upgrades roll out across Ethereum, only the most resilient protocols will thrive.