Harvest Finance Harvested

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Harvest Finance

Smart contract thinks it's a good idea to give $25m to a hacker - no issues or suspicion at all. It does what it's programmed to do.

Development team asks hacker to return funds. He does - return some of them.

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

About Harvest Finance

"Harvest Finance is an automatic yield farming protocol that helps traders take advantage of the latest DeFi platforms with the highest yield." "The DeFi space is becoming more complex as more protocols are being introduced. Harvest Finance aims to help non-savvy users yield farm and get the highest DeFi yield while saving time and money. For users who are yield farming with small amounts of capital, it may not be the most effective use of time to constantly harvest yield from the various DeFi yield farms. Constantly harvesting yield will also incur high gas cost. Harvest Finance collates capital from various yield farmers to do yield farming more effectively saving time and money for users." "[O]n October 6th, Harvest Finance published a security update stating that they were ensuring the safety of their lands via “rigorous security audits” from Peckshield, Haechi Labs, and CertiK." "The team states that its smart contracts have been audited by Haechi Labs and PeckShield."

"On October 26, 02:53:31 AM +UTC, an attacker executed a theft of funds from the USDC and USDT vaults of Harvest Finance. The attacker exploited an arbitrage and impermanent loss that influences the value of individual assets inside the Y pool of Curve.fi, which is where the funds of Harvest’s vaults were invested." "A skilled farmer used flash loans to reap $33.8 million from the FARM_USDT and FARM_USDC pools."

"The price calculation mechanism for LP deposits and withdrawals was the source of the exploit, meaning this attack could have carried over to the renBTC pool, the FARM_TUSD pool, and the FARM_DAI pool. However the hacker chose to stop after draining $25m or 17% of what was available in the FARM_USDT and FARM_USDC pools, although they could have easily continued to drain the entire pool for a total of $400m if they had so desired."

"Harvest Finance is sorry for the “engineering error,” committed to change, and kindly requests that the thief return the stolen money." "For the attacker: you've proven your point, if you can return the funds to the users, it would be greatly appreciated by the community, including many bystanders watching DeFi from afar."

"To protect users, Harvest Finance pulled the y pool and BTC Curve strategy funds to its vault adding that all stablecoin and BTC funds are secured." "LPs and Harvest developers received a reasonably sized sum of money, as the hacker chose to throw back some scraps ($2,478,549.94) to the Harvest Deployer in the form of USDT and USDC." "The $2.5 million returned by the hacker will be “distributed to the affected depositors pro-rata using a snapshot,” Harvest tweeted."

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 - Harvest Finance Harvested
Date	Event	Description
October 26th, 2020 12:00:00 AM	First Event	This is an expanded description of what happened and the impact. If multiple lines are necessary, add them here.

Total Amount Lost

The total amount lost is unknown.

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

It is unknown how much was recovered.

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?

Prevention Policies

The decentralized finance space is still new and developing. In the meantime, it can't be considered secure. Even in the future, it's not possible to know if any exploits remain. A smart contract is pretty similar to a hot wallet.

The only secure storage of customer funds is in an offline (air-gapped) multi-signature wallet held by trained individuals.