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Reentrancy Attack occurs when the attacker drains funds from the target by recursively calling the target’s withdraw function. When the contract fails to update its state, a victim’s balance, prior to sending funds, the attacker can continuously call the withdraw function to drain the contract’s funds. A famous real-world Reentrancy attack is the The DAO Project attack, which caused a loss of 60 million US dollars.

Source: https://arxiv.org/pdf/2105.02881.pdf