Balancer pools holding deflationary tokens (like STA which burns 1% per transfer) were exploited. An attacker used a dYdX flashloan to repeatedly trade between STA and ETH, depleting STA to 1 wei while Balancer's balance tracking failed to account for the fee burns. They extracted ETH, WBTC, LINK and SNX from severely imbalanced pools.

The Balancer liquidity pool was attacked by Lightning Loan and lost $500,000. The two losses suffered by Balacer are STA and STONK. At present, the liquidity of these two token pools has been exhausted. Both STA and STONK tokens are deflation tokens, which means that this attack only affects the liquidity pool of deflation tokens. The deflationary tokens on Balancer and its smart contracts are incompatible in certain specific scenarios, allowing attackers to create and profit from STA/STONK circulation pools with price deviations.