Hundred Finance WBTC Optimism Exploit

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' section 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!

Hundred Finance

Hundred Finance is a multi-chain lending protocol that allows users to borrow and lend assets in a decentralized and economically efficient manner. It was audited by WhiteHatDAO in Feb 2022. The platform integrates with Chainlink oracles to ensure market health and stability. The distribution of HND, its governance token, is ongoing to broaden the ownership of the governance token and the platform's usage. The platform aims to expand to multiple chains in order to deliver its decentralized financial services as widely as possible. However, on April 15th, Hundred Finance suffered a $7.4M exploit on Optimism due to the attacker manipulating the exchange rate by donating a large amount of WBTC to the hWBTC contract. The root cause appears to be the same reentrancy mechanism that hit CREAM Finance in August 2021. Hundred Finance launched a $500k reward for information leading to the attacker's arrest and the return of all funds.

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

About Hundred Finance

"Hundred is a Compound fork which uses hTokens to track lending positions. It was audited in Feb 2022 by WhiteHatDAO."

"HUNDRED FINANCE A multi-chain lending protocol using veHND model, it integrates with Chainlink oracles to ensure market health and stability."

"Since the explosion in popularity of the decentralized finance ecosystem in 2020, borrowing and lending platforms have become core infrastructure within the cryptocurrency space. Not only do they provide users the ability to “hodl” or leverage their crypto assets, obtaining liquidity from their investments (a crypto-backed loan) while simultaneously earning interest, they also underpin the workings of many other protocols. The movement of assets from the Ethereum mainnet to EVM-compatible blockchains and scaling solutions has only emphasized their importance. Platforms that grant the ability to borrow and lend are one of the key applications users look for on any emerging chain. Hundred Finance aims to play a central role in provisioning borrowing and lending services in the multi-chain world, granting the ability to earn yield and borrow assets to a users in a trustless, secure, and economically efficient manner."

"Hundred Finance first launched on Ethereum’s Kovan testnet in late-June of 2021. Following a two-month period of extensive testing, it was then soft-launched on the Ethereum mainnet in preparation for the generation of the HND token. With the platform and token up and running, the fully-enabled Arbitrum version of the Hundred Finance dApp was deployed and the distribution of HND began."

"In December of 2021, a vote-escrow governance token mechanism was implemented using contracts developed by Curve Finance. This addition facilitated direct community involvement in the emission of HND through the use of stablecoin staking contracts known as gauges. These gauges receive a quantity of HND per epoch (one-week period) based on votes cast by our multichain mveHND (mirrored vote-escrow HND) governance token holders."

"The distribution of HND is ongoing, as the broadening of the ownership of our governance token and the platform’s usage are the principle means by which Hundred Finance is acquiring a decentralized, community governance structure and the ability to function as a trustless provider of borrowing and lending services."

"The goal of Hundred Finance is to expand to multiple chains in order to deliver its decentralized and economically efficient financial services as widely as possible. The Hundred Finance dApp grants users access to these networks through its integration with compatible Web3 wallets. Users are able to select the network they wish to interact with from the platform’s main page, an action that will automatically trigger the selection of the correct network by their browser-integrated Web3 wallet. While the platform maintains the same core functionality independent of the chain, assets, interest rates and other variables, such as transaction costs, differ between them."

"Shortly after 2pm UTC on April 15th, Hundred Finance suffered a $7.4M exploit on Optimism." "[T]he attack vector was the same reentrancy mechanism which hit CREAM Finance in August 2021."

"The root cause appears the attacker donates 200 WBTC to inflate hWBTC's exchange rate so that even a tiny amount (2 wei) of hWBTC can basically drain current lending pools."

"It looks that Hundred got hacked on #Optimism. We will update when there is more information to it."

"The root cause is that the attacker can manipulate the exchangeRate by donating a large amount of WBTC to the hWBTC contract.

In the getAccountSnapshot function, the value of exchangeRateMantissa relies on the amount of WBTC in the contract.

The attacker flashloaned 500 $WBTC, then called the redeem function to redeem the previously staked 0.3 WBTC.

Next, the attack contract 1 sent 500.3 WBTC to attack contract 2. Contract 2 used 4 BTC to mint 200 hWBTC. The redeem function was then called to redeem the 4 BTC.

Here the attacker can redeem the 4 WBTC previously staked with less than 200 hWBTC. At this point the attacker had a very small amount of hWBTC left on contract 2.

Attack contract 2 then sent 500.3 WBTC to the hWBTC contract and borrowed 1021.91 ETH via the remaining 2 hWBTCs.

Finally the attack contract 2 repaid the previous debt by using 1 hWBTC, and withdrew 500.3 WBTC from the contract."

"48h passed since we sent an on-chain message to the hacker and tried to start negotiations with him.

Today we are launching a $500k reward in the hope that this provides additional incentive for info that leads to the Hundred attacker’s arrest and the return of all 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.

Key Event Timeline - Hundred Finance WBTC Optimism Exploit

Date	Event	Description
April 15th, 2023 8:12:00 AM MDT	First Exploit Transaction	The first exploit by the contract attacker.

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 $7,400,000 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?

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.