View source for Pythia Finance Staking Contract Vulnerability And Rug Pull

{{Imported Case Study With About|source=https://www.quadrigainitiative.com/casestudy/pythiafinancestakingcontractvulnerabilityandrugpull.php}}
{{Unattributed Sources}}

[[File:Pythiafinance.jpg|thumb|Pythia Finance Logo]]Pythia Finance described itself as a cutting edge DAO producing a pure algorithmic stablecoin without the need for any fiat backing. They promised they were serious about security and had a rigorous code review just moments before their staking contract was exploited. It appears that their attempt to burn tokens did nothing to improve their predicament, and their talks with Quill Audits to get an audit performed broke down. In the end, their ultimate public relations decision was to delete the Twitter and website both.<ref name="slowmisthackedarchive-16022" /><ref name="pythiafinancetwitter-16034" /><ref name="pythiafinancetwitterarchive-16035" /><ref name="pythiafiarchive-16036" /><ref name="cointelegraph-16037" /><ref name="quillauditsaitwitter-16038" /><ref name="pythiafinancetwitter-16039" /><ref name="dexsignaltwitter-16040" /><ref name="decryps01twitter-16041" /><ref name="0xdefioortwitter-16042" /><ref name="freewheeltwitter-16043" /><ref name="zlmy888888twitter-16044" /><ref name="pinkpunkbotcntwitter-16045" /><ref name="akaidegentwitter-16046" /><ref name="unigemaitwitter-16047" /><ref name="0xdefioortwitter-16048" /><ref name="0xdefioortwitter-16049" /><ref name="etherscan-16050" /><ref name="etherscan-16051" /><ref name="onesafe-16052" />

== About Pythia Finance ==
"Pythia Finance is a cutting-edge decentralized autonomous organization (DAO) that’s revolutionizing stablecoins in DeFi. Unlike traditional stablecoins, Pythia’s approach is purely algorithmic—no fiat backing needed."

"Pythia’s roadmap is packed with exciting developments—protocol enhancements, ecosystem expansion, and ongoing community engagement."

"Pythia Finance is serious about security. With rigorous code reviews, continuous monitoring, and regular third-party audits, your assets are in safe hands."

== The Reality ==
This sections is included if a case involved deception or information that was unknown at the time. Examples include:

* When the service was actually started (if different than the "official story").
* Who actually ran a service and their own personal history.
* How the service was structured behind the scenes. (For example, there was no "trading bot".)
* Details of what audits reported and how vulnerabilities were missed during auditing.

== What Happened ==
The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.
{| class="wikitable"
|+Key Event Timeline - Pythia Finance Staking Contract Vulnerability And Rug Pull
!Date
!Event
!Description
|-
|September 2nd, 2024 2:30:37 PM MDT
|Pythia Homepage Captured
|The Pythia Finance homepage is captured in the Internet Archive as a blank white page. (Typical failure of Internet Archive.)
|-
|September 2nd, 2024 9:02:00 PM MDT
|Pythis Description Published
|A description on Twitter goes through the Pythia stablecoin and philosophy.
|-
|September 2nd, 2024 9:41:11 PM MDT
|First Attack Transaction
|The first attack transaction against the Pythia stablecoin.
|-
|September 3rd, 2024 7:43:35 AM MDT
|Pythia Finance Tokens Burned
|Pythia Finance burns some 29,369 Pythia tokens to increase the price. They report this in a Tweet on Twitter.
|-
|September 3rd, 2024 8:31:00 AM MDT
|Quill Audit Publishes Details
|Quill Audits publishes details of the exploit which happened.
|-
|September 4th, 2024 6:24:00 AM MDT
|QuillAudit Discussion Reported
|The Pythia Finance team was reportedly in talks with Quill Audits to get a smart contract audit performed.
|-
|September 4th, 2024 11:40:00 AM MDT
|Twitter Account/Site Deleted
|The Pythia Finance team apparently decides that the next appropriate public relations move is to delete their Twitter and website presence entirely.
|-
|September 9th, 2024 6:13:23 PM MDT
|CoinTelegraph Article Published
|CoinTelegraph publishes an article about the exploit situation.
|}

== Technical Details ==
"The attacker called the “claim rewards” function repeatedly, without allowing the reward balance to be updated after each call, allowing them to collect more rewards than they were entitled to.

According to the report, the attacker was able to call this function repeatedly and in rapid succession because Pythia called the token’s “safe transfer” function when rewards were distributed. Thus, a malicious token contract could call back Pythia, causing Pythia to call it back again, and resulting in a chain reaction that could drain the protocol’s funds."

== Total Amount Lost ==
The total amount lost has been estimated at $53,000 USD.

How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?

== Immediate Reactions ==
"The decentralized algorithmic stablecoin protocol Pythia was attacked due to a vulnerability in its staking contract, resulting in a loss of 21 ETH (approximately $53,000)."

Original tweet 9929: "Pythia Finance had an unfortunate event of exploit"

Subsequent tweet 7709: "We have burned 29369 $Pythia Tokens that were retrieved after the exploit from Escrow contract. https://t.co/uq5RBUkVOa"

== Ultimate Outcome ==
"Twitter account deleted and 60K stolen to investors 1h ago with a rugpull. Keep faith folks"

== Total Amount Recovered ==
There do not appear to have been any funds recovered in this case.

What funds were recovered? What funds were reimbursed for those affected users?

== Ongoing Developments ==
What parts of this case are still remaining to be concluded?
== Individual Prevention Policies ==
{{Prevention:Individuals:Placeholder}}

{{Prevention:Individuals:End}}

== Platform Prevention Policies ==
{{Prevention:Platforms:Placeholder}}

{{Prevention:Platforms:End}}

== Regulatory Prevention Policies ==
{{Prevention:Regulators:Placeholder}}

{{Prevention:Regulators:End}}

== References ==
<references><ref name="slowmisthackedarchive-16022">[https://web.archive.org/web/20240904160149/https://hacked.slowmist.io/ SlowMist Hacked - SlowMist Zone] (Accessed Sep 30, 2024)</ref>

<ref name="pythiafinancetwitter-16034">[https://twitter.com/pythiafinance/status/1830937365918969929 @pythiafinance Twitter] (Accessed Sep 30, 2024)</ref>

<ref name="pythiafinancetwitterarchive-16035">[https://web.archive.org/web/20240903115419/https://twitter.com/pythiafinance/status/1830937365918969929 @pythiafinance Twitter] (Accessed Sep 30, 2024)</ref>

<ref name="pythiafiarchive-16036">[https://web.archive.org/web/20240902203037/https://pythia.fi/ PYTHIA] (Accessed Sep 30, 2024)</ref>

<ref name="cointelegraph-16037">[https://cointelegraph.com/magazine/pythia-finance-drained-53k-crypto-sec/ https://cointelegraph.com/magazine/pythia-finance-drained-53k-crypto-sec/] (Accessed Sep 30, 2024)</ref>

<ref name="quillauditsaitwitter-16038">[https://twitter.com/quillaudits_ai/status/1830976830607892649 @quillaudits_ai Twitter] (Accessed Sep 30, 2024)</ref>

<ref name="pythiafinancetwitter-16039">[https://twitter.com/pythiafinance/status/1830965542536257709 @pythiafinance Twitter] (Accessed Sep 30, 2024)</ref>

<ref name="dexsignaltwitter-16040">[https://twitter.com/DexSignal/status/1831300228328177871 @DexSignal Twitter] (Accessed Sep 30, 2024)</ref>

<ref name="decryps01twitter-16041">[https://twitter.com/decryps01/status/1831307405444935716 @decryps01 Twitter] (Accessed Sep 30, 2024)</ref>

<ref name="0xdefioortwitter-16042">[https://twitter.com/0xdefioor/status/1830803624898773488 @0xdefioor Twitter] (Accessed Sep 30, 2024)</ref>

<ref name="freewheeltwitter-16043">[https://twitter.com/freeWheel_/status/1831386866828120333 @freeWheel_ Twitter] (Accessed Sep 30, 2024)</ref>

<ref name="zlmy888888twitter-16044">[https://twitter.com/zlmy888888/status/1830780622786154937 @zlmy888888 Twitter] (Accessed Sep 30, 2024)</ref>

<ref name="pinkpunkbotcntwitter-16045">[https://twitter.com/PinkPunkBotCN/status/1831039937128669316 @PinkPunkBotCN Twitter] (Accessed Sep 30, 2024)</ref>

<ref name="akaidegentwitter-16046">[https://twitter.com/AkaiDegen/status/1830978167752007734 @AkaiDegen Twitter] (Accessed Sep 30, 2024)</ref>

<ref name="unigemaitwitter-16047">[https://twitter.com/UniGemAI/status/1830882032723083399 @UniGemAI Twitter] (Accessed Sep 30, 2024)</ref>

<ref name="0xdefioortwitter-16048">[https://twitter.com/0xdefioor/status/1830803644108636237 @0xdefioor Twitter] (Accessed Sep 30, 2024)</ref>

<ref name="0xdefioortwitter-16049">[https://twitter.com/0xdefioor/status/1830803646969163981 @0xdefioor Twitter] (Accessed Sep 30, 2024)</ref>

<ref name="etherscan-16050">[https://etherscan.io/tx/0xa3f9b46e4ecc1767ec40f3ad880fac793cef5fbd7b1d5bbe4fb670640d4ddc20 Ethereum Transaction Hash (Txhash) Details | Etherscan] (Accessed Sep 30, 2024)</ref>

<ref name="etherscan-16051">[https://etherscan.io/address/0x542533536e314180e1b9f00b2c046f6282eb3647 Contract Address 0x542533536e314180e1b9f00b2c046f6282eb3647 | Etherscan] (Accessed Sep 30, 2024)</ref>

<ref name="onesafe-16052">[https://www.onesafe.io/blog/defi-security-risks-and-solutions The Pythia Hack: A Lesson in DeFi Security - OneSafe Blog] (Accessed Sep 30, 2024)</ref></references>