HARVEST FINANCE

DESCRIPTION OF EVENTS

"Harvest Finance is an automatic yield farming protocol that helps traders take advantage of the latest DeFi platforms with the highest yield." "The DeFi space is becoming more complex as more protocols are being introduced. Harvest Finance aims to help non-savvy users yield farm and get the highest DeFi yield while saving time and money. For users who are yield farming with small amounts of capital, it may not be the most effective use of time to constantly harvest yield from the various DeFi yield farms. Constantly harvesting yield will also incur high gas cost. Harvest Finance collates capital from various yield farmers to do yield farming more effectively saving time and money for users." "[O]n October 6th, Harvest Finance published a security update stating that they were ensuring the safety of their lands via “rigorous security audits” from Peckshield, Haechi Labs, and CertiK." "The team states that its smart contracts have been audited by Haechi Labs and PeckShield."

"On October 26, 02:53:31 AM +UTC, an attacker executed a theft of funds from the USDC and USDT vaults of Harvest Finance. The attacker exploited an arbitrage and impermanent loss that influences the value of individual assets inside the Y pool of Curve.fi, which is where the funds of Harvest’s vaults were invested." "A skilled farmer used flash loans to reap $33.8 million from the FARM_USDT and FARM_USDC pools."

"The price calculation mechanism for LP deposits and withdrawals was the source of the exploit, meaning this attack could have carried over to the renBTC pool, the FARM_TUSD pool, and the FARM_DAI pool. However the hacker chose to stop after draining $25m or 17% of what was available in the FARM_USDT and FARM_USDC pools, although they could have easily continued to drain the entire pool for a total of $400m if they had so desired."

"Harvest Finance is sorry for the “engineering error,” committed to change, and kindly requests that the thief return the stolen money." "For the attacker: you've proven your point, if you can return the funds to the users, it would be greatly appreciated by the community, including many bystanders watching DeFi from afar."

"To protect users, Harvest Finance pulled the y pool and BTC Curve strategy funds to its vault adding that all stablecoin and BTC funds are secured." "LPs and Harvest developers received a reasonably sized sum of money, as the hacker chose to throw back some scraps ($2,478,549.94) to the Harvest Deployer in the form of USDT and USDC." "The $2.5 million returned by the hacker will be “distributed to the affected depositors pro-rata using a snapshot,” Harvest tweeted."

Smart contract thinks it's a good idea to give $25m to a hacker - no issues or suspicion at all. It does what it's programmed to do.

Development team asks hacker to return funds. He does - return some of them.

HOW COULD THIS HAVE BEEN PREVENTED?

The decentralized finance space is still new and developing. In the meantime, it can't be considered secure. Even in the future, it's not possible to know if any exploits remain. A smart contract is pretty similar to a hot wallet.

The only secure storage of customer funds is in an offline (air-gapped) multi-signature wallet held by trained individuals.

Check Our Framework For Safe Secure Exchange Platforms

‘Engineering Error’ Led to $34 Million DeFi Hack, Harvest Finance Says - Decrypt (May 12)
@harvest_finance Twitter (May 12)
Harvest Flashloan Economic Attack Post-Mortem (May 12)
@harvest_finance Twitter (May 13)
Breaking: DeFi Protocol Harvest Finance Attack Targeting Liquidity Pools (May 13)
Rekt - Leaderboard (May 13)
Rekt - Harvest Finance - REKT (May 16)
Ethereum Transaction Hash (Txhash) Details | Etherscan (May 16)
Ethtx.info Analysis  (May 16)
@CurveFinance Twitter (May 16)
Harvest Finance price, FARM price index, chart, and info | CoinGecko (May 16)
CipherTrace Cryptocurrency Crime and Anti-Money Laundering Report 2020 (Jun 20)
SlowMist Hacked - SlowMist Zone (May 18)
List of Ethereum Smart Contracts Post-Mortems - Security - OpenZeppelin Community (Jun 23)
Millions Lost: The Top 19 DeFi Cryptocurrency Hacks of 2020 | Crypto Briefing (May 22)
Harvest Finance Developers Adamant on Keeping the $1 Billion Project Centralized | Crypto Briefing (Jun 27)
Hackers Drain DeFi Protocol Harvest Finance of $24 Million | Crypto Briefing (Jun 27)
@amanusk_ Twitter (Jul 24)
@valentinmihov Twitter (Jul 24)
@jiecut42 Twitter (Jul 24)

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