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What Is Reentrancy and Why Is It a Critical Smart Contract Vulnerability?

Reentrancy is a vulnerability where an external malicious contract can repeatedly call a function in the vulnerable contract before the first execution is complete. This allows the attacker to drain funds, such as collateral, by repeatedly withdrawing before the contract updates its balance.

It was famously exploited in the DAO hack.

How Did the DAO Hack in 2016 Utilize a Reentrancy Attack?
What Are the Differences between Single-Function and Cross-Function Reentrancy Attacks?
What Security Vulnerability Is Associated with “Reentrancy” in Smart Contracts?
How Does a Reentrancy Attack Relate to the DAO Hack?