VALUE DEFI

DESCRIPTION OF EVENTS

"Value DeFi is a platform that plans to provide crypto holders with easy accessibility to the increasing variety of decentralized finance services that it hosts. As its official website puts it, the protocol aims to “bring fairness, true value, and innovation to Decentralized Finance.”" "Value DeFi works as a platform for yield farming and staking crypto assets. The protocol benefits from stamps of approval from big industry auditing names, such as The Arcadia Group and PeckShield, to provide users with maximum security standards." "Value Defi, a yield aggregating protocol, boasted of having the “highest security” in a Nov. 13 tweet that now appears to have been deleted. The protocol claimed that its technology was capable of preventing flash loan attacks."

"The ValueDefi MultiStables vault was recently the subject of a complex attack that resulted in a loss of user deposits." "Value DeFi’s exploit took place the day after the launch of its MultiStables Vault, a new financial project designed to shift investors’ money around different DeFi protocols to maximize profits." "Value DeFi tweeted that it [wa]s "very excited with [their] most recent innovation, the MultiStables Vault, and [they] strive to ensure your funds are always SAFU with [their] vaults." Lots of emojis, lots of pride in one's work." "Value Defi said it suffered a “complex attack that resulted in a net loss of $6 million.”"

"The hacker borrows a hundred million dollars through flash loans. He deposited 25M DAI into the contract in exchange for 24.2M shares of the pool. The hacker then dumped 91M DAI and 31M USDT to mess with the prices on Curve. Now, when the hacker withdrew his shares, he got more stablecoin back than he put in as the prices got manipulated lower. Since the prices for USDT and DAI are really low because the hacker dumped all the tokens, the hacker then buys back the DAI and USDT at the low prices to get his money back. He pays only the 0.04% swap fee twice to manipulate the prices. Finally the guy pays back his flash loan and keeps the profit from the attack."

"The MultiStables vault was the subject of a complex attack that resulted in a net loss of $6M. We are currently working on a postmortem and are exploring ways to mitigate the impact on our users." "The new vault uses our new code of vault v2, which had not been audited."

"The idea is that Chainlink’s feeds are decentralized—information’s verified by disparate teams of crypto security firms—so it’s difficult for people to conspire to fake information." "The hack relied on a centralized price feed to confirm prices in the vault—making it vulnerable to manipulation. So the team decided to decentralize its price oracle to stop this from happening again. It chose Chainlink."

"The hacker has returned $95,000 in DAI stablecoins after reading some sad messages left for him in Ethereum transactions." "A number of individuals have received a portion of their stolen funds back, however, after pleading with the hacker using input data on the Ethereum blockchain." "Using the “Private Note” function, one of the allegedly affected users claimed to be a nurse who lost $100,000 in Value DeFi hack." "“I lost $100,000 in your attack. I am a nurse. These are all my savings. I hope you can return it to me. Everyone will get sick. Think of the nurses who care you when you are sick. I wish you always healthy and enjoy the happiness of the world. GOD BLESS YOU,” the user wrote in their private note. In his reply, the hacker noted that “there are so many people who lack knowledge and caution, and sooner or later those money will be lost,” but nonetheless sent the user 50,000 DAI a few moments later." "In the time since these messages were posted, many affected users have likewise sent small transactions with messages attached, requesting that the hacker make them whole again. At the time of publication, there have since yesterday been no outgoing transactions from the address associated with the exploit."

"We will create a compensation fund which will be funded by a combination of the dev fund, insurance fund and a portion of the fees that are currently generated by the protocol." "Finally, we have also reached out to the hacker to see if there is any resolution possible. While unconfirmed, there has been news that he has been reimbursing certain users." "Point well-proven! Clearly we were not as knowledg[e]able as we thought we were. How about 1mil DAI as a bounty and you return the remaining DAI back to our affected users. We have a plan to make whole all those affected in our community, and this would accelerate the process." "The attacker returned $2 million to the protocol and pocketed $6 million — and with it left one audacious message stating, “do you really know flashloan?”"

Value DeFi attracted a lot of interest around the world in their project, and many participants were unaware of the level of risk involved.

The hacker reimbursed two of the victims, and the protocol worked to assist the rest. However, it goes to show that the space is still developing.

HOW COULD THIS HAVE BEEN PREVENTED?

Smart contracts are essentially hot wallets with a known code base. It's basically impossible to prove that the assets held are secure.

Offline storage of funds in a multi-signature wallet is significantly more secure and has a record of no breaches to date.

Check Our Framework For Safe Secure Exchange Platforms

After $6 Million Hack, Value DeFi Turns to Chainlink for Help - Decrypt (May 13)
"Saddest Hack in Crypto": Value DeFi Hacked for $6 Million - Decrypt (May 13)
MultiStables Vault Exploit Post Mortem (May 13)
Defi Protocol That Bragged About Having Flash Loan Attack Prevention Hacked for $6 Million – Bitcoin News (May 13)
A Guide to Value DeFi (VALUE) - A Plead for Fairness in DeFi (May 16)
A simple explanation of the Value DeFi hack : ethereum (May 16)
Value DeFi Hacker Sends Back $95,000 in DAI - Decrypt (May 16)
Ethereum Transaction Hash (Txhash) Details | Etherscan (May 16)
Ethereum Transaction Hash (Txhash) Details | Etherscan (May 16)
$1.01 | Dai Stablecoin (DAI) Token Tracker | Etherscan (May 16)
Value DeFi protocol hacker flooded with sob stories after returning $95K Dai  (May 16)
Ethereum Transaction Hash (Txhash) Details | Etherscan (May 16)
Value DeFi protocol suffers $6 million flash loan exploit (May 16)
$7.4 million stolen in Value DeFi exploit - CoinGeek (May 16)
Four Hacks, one week (Jun 19)
CipherTrace Cryptocurrency Crime and Anti-Money Laundering Report 2020 (Jun 20)
SlowMist Hacked - SlowMist Zone (May 18)
Blockchain Hacks: 2020 | $15 billion lost, how can we mitigate hacks in 2021? | CertiK Foundation Blog (Jul 23)
Comprehensive List of DeFi Hacks & Exploits - CryptoSec (Jan 8)
Value DeFi Suffers $6M Flash Loan Attack - CoinDesk (Jan 9)

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