Value DeFi Goes On Sale

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Value DeFi

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.

This is a global/international case not involving a specific country.

About Value DeFi

"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?”"

This is a global/international case not involving a specific country.

The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.

Include:

• Known history of when and how the service was started.
• What problems does the company or service claim to solve?
• What marketing materials were used by the firm or business?
• Audits performed, and excerpts that may have been included.
• Business registration documents shown (fake or legitimate).
• How were people recruited to participate?
• Public warnings and announcements prior to the event.

Don't Include:

• Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
• Anything that wasn't reasonably knowable at the time of the event.

There could be more than one section here. If the same platform is involved with multiple incidents, then it can be linked to a main article page.

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.

Key Event Timeline - Value DeFi Goes On Sale

Date	Event	Description
November 14th, 2020	Main Event	Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here.

Technical Details

This section includes specific detailed technical analysis of any security breaches which happened. What specific software vulnerabilities contributed to the problem and how were they exploited?

Total Amount Lost

The total amount lost has been estimated at $11,000,000 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

How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?

Ultimate Outcome

What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?

Total Amount Recovered

The total amount recovered has been estimated at $90,000 USD.

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?

General Prevention Policies

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.

Individual Prevention Policies

No specific policies for individual prevention have yet been identified in this case.

For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.

Platform Prevention Policies

Policies for platforms to take to prevent this situation have not yet been selected in this case.

For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.

Regulatory Prevention Policies

No specific regulatory policies have yet been identified in this case.

For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.