MonoX Software Bug
Notice: This page is a freshly imported case study from the original repository. The original content was in a different format, and may not have relevant information for all sections. Please help restructure the content by moving information from the 'About' and 'General Prevention' sections to other sections, and add any missing information or sources you can find. If you are new here, please read General Tutorial on Wikis or Anatomy of a Case Study for help getting started.
Notice: This page contains sources which are not attributed to any text. The unattributed sources follow the initial description. Please assist by visiting each source, reviewing the content, and placing that reference next to any text it can be used to support. Feel free to add any information that you come across which isn't present already. Sources which don't contain any relevant information can be removed. Broken links can be replaced with versions from the Internet Archive. See General Tutorial on Wikis, Anatomy of a Case Study, and/or Citing Your Sources Guide for additional information. Thanks for your help!
The blockchain project MonoX had their smart contract hot wallets breached and $31m of user funds were taken. As a new project, they didn't have much funds available to assist their users, however they are working on a compensation plan.
This is a global/international case not involving a specific country.[1][2][3][4][5][6][7][8]
About MonoX
"MonoX is a new DeFi protocol using a single token design for liquidity pools (instead of using pool pairs). This is made possible by grouping deposited tokens into a virtual pair with the vCASH stablecoin. Our first use case for single token liquidity pools will be an Automated Market Maker - Monoswap, which is set to launch in October 2021. In the future, we will be launching lending/borrowing and derivatives products."
"An attacker exploited a vulnerability in MonoX Finance's smart contract to inflate the price of its digital token and then cash out."
"BLOCKCHAIN STARTUP MONOX Finance said on Wednesday that a hacker stole $31 million by exploiting a bug in software the service uses to draft smart contracts."
"The past 24 hours have been difficult, and we’re simply at a loss for words. No apologies and no amount of words can describe how the team has been feeling since the attack transpired. We started building over a year ago with a mission to make DeFi more accessible to users and projects. We appreciate all the support we have received along the way from friends, partners, investors and our community of users."
"First, we wanted to give you a quick breakdown of the addresses that have lost funds and each of these wallets are on top of mind to make right. 406 ETH and 15,523 Polygon addresses have been affected by the hack, and of these addresses, 42 ETH and 2,653 Polygon have been actively LPing in more than just 1 pool. Roughly $31M was drained from the pool as a result of the hack."
"The exploit was caused by a smart contract bug that allows the sold and bought token to be the same. In the case of the attack, it was our native MONO token. When a swap was taking place and tokenIn was the same as tokenOut, the transaction was permitted by the contract."
"Any price updates from swap from tokenIn and tokenOut were independently verified by the contract. With tokenOut being verified last, this caused a massive price appreciation of MONO. The attacker then used the highly priced MONO to purchase all the other assets in our pool and drained the funds. The attack was completed through a script, and was highly organized."
"As a new start up that had only launched our product for 2 months, we are in a tricky situation. Immediate remuneration of $31m to our users and investors is not possible. We also have to be conscious of compensating users with $MONO immediately because that would cause a downward death spiral of the token as users liquidate the $MONO. However, we are working on a strategy to pay back our users in full over time."
"If we can’t recoup the funds by 1/3/2022 we will issue a debt token dMONO for every dollar we are compensating. This token will be non-transferable, and we will deploy a dMONO vault."
"The way our protocol works, we are around 100x more profitable than a regular DEX with a similar TVL. When we relaunch again we will be buying back MONO using our revenue and sending MONO to this vault. Any holders of dMONO can withdraw from the vault at any time by burning their dMONO. When a withdrawal is done it is not reversible. If you choose to withdraw your dMONO before it reaches the owed value, it means you are forgiving the remaining portion of the debt."
"MonoX developers are working to implement new functionality to prevent exploits in the future. We will also be implementing new features to minimize LP risk by offering protocol-owned liquidity via bonds. More details on this to come in the near future."
"We have started to work with Immunefi and will offer an ongoing bug bounty for our product. We will scale the bug bounty amount as our TVL increases." "In the future, we will scale out TVL more slowly and are actively seeking ways to match higher insured amounts for the pool."
"The next iteration of the MonoX protocol will be launched with the utmost attention to security and detail. MonoX will relaunch only after a considerable effort from its developers and safety partners is spent to ensure robust security."
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 |
|---|---|---|
| December 2nd, 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 $31,000,000 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
There are a number of ways to prevent and mitigate this situation. It is far more secure to have the majority of funds in a multi-signature wallet where keys are stored offline by multiple operators. This would limit the potential loss to only those funds being actively within the hot wallet. Audits can be used to reduce the risks on the hot wallets further, and we advocate at least 2 reviews would be required prior to a project launch. We also propose a comprehensive industry insurance fund which could be available to assist.
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
- ↑ A Software Bug Let Hackers Drain $31M From a Crypto Service | WIRED (Dec 16, 2021)
- ↑ MonoX (Dec 28, 2021)
- ↑ About - MonoX (Dec 28, 2021)
- ↑ The Path Forward Part 2 Community Compensation (Dec 28, 2021)
- ↑ Exploit Post Mortem (Dec 28, 2021)
- ↑ @BlockSecTeam Twitter (Dec 28, 2021)
- ↑ @Mudit__Gupta Twitter (Dec 28, 2021)
- ↑ Rekt - MonoX - REKT (Dec 28, 2021)