Iron Finance Irony

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Iron Finance

Iron Finance had a couple of liquidity pools which had incorrect "adopted weighted constant product invariants" which caused an attacker to be able to exploit the error and drain funds from the pools.

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

About Iron Finance

Iron Finance offers "a Partially-collateralized Stablecoin on the Binance Smart Chain". The iron token is "pegged to $1, partly backed by collateral like BUSD, and partially backed by STEEL. The collateralized ratio (CR), which is the collateralized and algorithmic ratio, depends on the market pricing of IRON. If the market demand for IRON is high, the system can be de-collateralized by decreasing the CR vis-a-vis when the demand is decreased."

"Started at 07:41:39 PM +UTC, May 7, 2021, ValueDeFi’s vSwap contract was exploited to drain a number of pools at the loss of about $11M." "AFFECTED IRON-STEEL 60%-40% vFarm STEEL-BUSD 70%-30% vFarm" "This incident was due to the mis-calculation by the protocol on the adopted weighted constant product invariant for non 50–50 ratio pools. There is no flashloan or price manipulation involved. The consequence of mis-calculated invariant allows for draining of affected pool funds. Currently, the bug has been exploited to attack 9 non 50–50 ratio pools with the estimated loss of $11M."

"Total exploited amount is about 4290 ETH and additional 900k$ in FARM, BAC and BASv2 which already been bridged to ETH." "Value DeFi posted on Telegram explaining that a cloud service (FaaS) upgrade changed the reward rate integer. However, the Iron Finance team was unaware. It updated the pools with a different reward rate integer which is what caused the incident."

"Following the Value DeFi incident which greatly affected our users, we are working tirelessly on rebuilding Iron Finance. Expect to hear from us progress updates on a daily basis as we strive to efficiently and promptly replace Value DeFi products and features. In parallel, we are trying to also keep pace with our Roadmap and other deliverables as planned."

"As you may know by now from following our Telegram group, the first step to re-build our protocol after the attack on ValueDefi is to find a new place for our liquidity pools and farms." "We are going to move our liquidity to PancakeSwap from ValueDefi." "Our farms with ValueDefi will be canceled and we are going to have our farms on our own brand new website, with a new design and interface."

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 - Iron Finance Irony

Date	Event	Description
May 7th, 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 $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

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

In general, it is not possible to be 100% certain that a smart contract is safe. Where smart contracts are necessary, community-based insurance can protect investors from the loss of all capital.

A more effective storage mechanism for funds would be an air-gapped multi-signature wallet.

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.