Impossible Finance Fake Token Drain: Difference between revisions
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{{Imported Case Study|source=https://www.quadrigainitiative.com/casestudy/impossiblefinancefaketokendrain.php}} | {{Imported Case Study 2|source=https://www.quadrigainitiative.com/casestudy/impossiblefinancefaketokendrain.php}} | ||
{{Unattributed Sources}} | {{Unattributed Sources}} | ||
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This is a global/international case not involving a specific country. | This is a global/international case not involving a specific country.<ref name="slowmisthacked-678" /><ref name="blockthreat-1779" /><ref name="watchpugmedium-1919" /><ref name="impossiblefinancemedium-1920" /><ref name="johndoughbulltwitter-1921" /><ref name="impossiblefinance-1922" /><ref name="investingcube-1923" /><ref name="cryptoslate-1924" /><ref name="watchpugtwitter-1925" /><ref name="btcmanager-1926" /><ref name="impossiblefitwitter-1927" /><ref name="impossiblefitwitter-1928" /><ref name="impossiblefinancemedium-1929" /><ref name="openblocksecgithub-2342" /><ref name="knownsecblockchainlabmedium-2415" /><ref name="muditguptatwitter-2416" /><ref name="peckshieldtwitter-2417" /><ref name="bscscan-2512" /> | ||
<ref name="slowmisthacked-678" /><ref name="blockthreat-1779" /><ref name="watchpugmedium-1919" /><ref name="impossiblefinancemedium-1920" /><ref name="johndoughbulltwitter-1921" /><ref name="impossiblefinance-1922" /><ref name="investingcube-1923" /><ref name="cryptoslate-1924" /><ref name="watchpugtwitter-1925" /><ref name="btcmanager-1926" /><ref name="impossiblefitwitter-1927" /><ref name="impossiblefitwitter-1928" /><ref name="impossiblefinancemedium-1929" /><ref name="openblocksecgithub-2342" /><ref name="knownsecblockchainlabmedium-2415" /><ref name="muditguptatwitter-2416" /><ref name="peckshieldtwitter-2417" /><ref name="bscscan-2512" /> | |||
== About Impossible Finance == | == About Impossible Finance == | ||
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!Description | !Description | ||
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|June 21st, 2021 | |June 21st, 2021 | ||
|Main Event | |Main Event | ||
|Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here. | |Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here. | ||
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|} | |} | ||
== 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 == | == Total Amount Lost == | ||
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== Ongoing Developments == | == Ongoing Developments == | ||
What parts of this case are still remaining to be concluded? | What parts of this case are still remaining to be concluded? | ||
== General Prevention Policies == | |||
== Prevention Policies == | |||
All affected users were made whole in this case. | All affected users were made whole in this case. | ||
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More secure forms of storage are generally simpler offline multi-sig wallets. | More secure forms of storage are generally simpler offline multi-sig wallets. | ||
== 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 == | ||
Latest revision as of 17:58, 2 May 2023
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The Impossible Finance smart contract contained an exploit which allowed for draining the liquidity pool by creating a fake token.
This was exploited. Some funds were returned, and the team made up the difference.
This is a global/international case not involving a specific country.[1][2][3][4][5][6][7][8][9][10][11][12][13][14][15][16][17][18]
About Impossible Finance
"Impossible Finance is a multi-chain incubator, launchpad, and swap platform which offers a robust product-first ecosystem that supports top-tier blockchain projects to targeted user audiences."
"Impossible Finance described the new “v2 swap design” as a big step forward, citing the increased flexibility it provides for market makers in how they provide liquidity into the protocol."
"The company touted the most significant improvement as a novel bonding curve called “xybk invariant,” which essentially achieves an artificial inflation of Total Value Locked (TVL) in pools by a multiplier of boost times."
"The enhancement also paves the way for low slippage trade execution while addressing the issue of Ethereum gas fees that have recently skyrocketed. The record transaction costs on the major blockchain have caused non-whale users to be slowly priced-out of DeFi because fees are eliminating their profits. In addition, many non-yield generating applications such as crypto-based gaming applications are becoming unusable on Ethereum Layer 1."
"On June 21, 2021 Impossible Finance LP contract design flaw was exploited which resulted in the loss of $700K."
"The DeFi protocol Impossible Finance on the BSC chain was attacked by lightning loans, and the attacker made a profit of 1,510.75 WBNB (a total of 497,000 US dollars)." "The attack on the Impossible Finance liquidity pool happened on June 21 and resulted in a loss of 229.84 Ethereum (ETH), valued $500.000 at the time of the exploit."
"Auditing service WatchPug explained that the attack involved consecutive swaps at about the same price, draining the liquidity pool, “which is usually impossible.”" "Using a vulnerability in the LP contract, the hacker managed to swap IF into BUSD at about the price 2 times in a row, which is usually “Impossible” because of the slippage."
Steps taken to produce the exploit: "(1) Borrow 233.3 BNB of flash loan from PancakeSwap. (2) Swapped 65,140 IF token. (3) Created a FAKE token called AAA (BBB). (4) Created LP with the FAKE token and IF. (5) Swapped 32,570 IF into 221,898 BUSD and another 32,570 IF into 221,898 BUSD using IF router thru the FAKE token LP. (6) Repeated the steps from 3 to 5. (7) Sold 556,384 BUSD for 1,731 BNB, repaid the flash loan."
"At step 5, the FAKE token got a special design that will call the swap() function of the LP contract, while the router calls the cheapSwap() function. The swap() call triggered by the transferFrom() of the FAKE token happened before the cheapSwap() call, which will update the price. So that the two swaps can be made at about the same price."
"Some of the funds were returned after an unknown action by BSC team."
"For full transparency we have written an event report and conducted a post-mortem analysis of this attack. Fortunately, this was an isolated incident and users' funds are safe. We are confident for a full recovery and have plans to emerge stronger from this." “All users who deposited into liquidity pools prior to the attack will be 100 percent compensated. We are confident for a full recovery and have plans to emerge stronger from this.”
Impossible Finance "completed full distribution of the reimbursed funds. Affected Liquidity Providers, please check your wallets for the reimbursed funds."
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.
| Date | Event | Description |
|---|---|---|
| June 21st, 2021 | 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 $700,000 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
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?
General Prevention Policies
All affected users were made whole in this case.
Security of smart contracts is similar to hot wallets.
Complex smart contracts generally contain vulnerabilities and cannot be proven secure.
More secure forms of storage are generally simpler offline multi-sig wallets.
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.
References
- ↑ SlowMist Hacked - SlowMist Zone (May 18, 2021)
- ↑ No Title (Jul 24, 2021)
- ↑ Impossible Finance Exploit Root Cause Analysis (Jul 24, 2021)
- ↑ Impossible Finance V2 Swap Jun 21st Postmortem (Jul 24, 2021)
- ↑ @johndoughbull Twitter (Jul 24, 2021)
- ↑ Impossible Finance - DeFi made impossibly easy (Jul 28, 2021)
- ↑ DeFi Project Impossible Finance Upgrades Swap Service with V2 Launch (Jul 28, 2021)
- ↑ DeFi hacks on Binance Smart Chain continue as 'Impossible Finance' drained for $500k | CryptoSlate (Jul 28, 2021)
- ↑ @WatchPug_ Twitter (Jul 28, 2021)
- ↑ DeFi Protocol Impossible Finance Suffers $700k Heist | BTCMANAGER (Jul 28, 2021)
- ↑ @impossiblefi Twitter (Jul 28, 2021)
- ↑ @impossiblefi Twitter (Jul 28, 2021)
- ↑ Impossible Finance 100 Compensation Plan (Jul 28, 2021)
- ↑ blocksec-incidents/2021.md at main · openblocksec/blocksec-incidents · GitHub (Aug 11, 2021)
- ↑ One thought of heaven, one thought of hell-Impossible Finance lightning loan attack incident tracking | by Knownsec Blockchain Lab | Medium (Aug 11, 2021)
- ↑ @Mudit__Gupta Twitter (Aug 11, 2021)
- ↑ @peckshield Twitter (Aug 11, 2021)
- ↑ Binance Transaction Hash (Txhash) Details | BscScan (Aug 15, 2021)