Deus Finance (DEI Stablecoin) Burn Vulnerability

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DEI Stablecoin

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][19][20]

About Deus Finance

"Deus Finance. Universal access to institutional-grade blockchain derivatives. Providing the framework for optimistic on-chain digital derivatives. Capital efficiency, cross-margin between exchanges and market makers, in addition to instant settlement, enables DEUS to offer an unparalleled alternative to TradFi."

"DEUS Finance is building an infrastructure layer for peer-to-peer, on-chain derivatives. DEUS v3 utilizes bilateral agreements, meaning both parties lock collateral into a trade, with every trade isolated, and settlements automated."

"DEUS connects traders and counterparties directly. Instead of the common LP-centric models, where liquidity providers take on the systemic risk, DEUS isolates risk per trade between the two parties. DEUS is currently primarily (majority of the liquidity) on the Fantom network, however, DEUS v3 can and will be deployed on multiple chains."

"The DEUS ecosystem has two tokens, $DEUS and $xDEUS, and an algorithmic stablecoin, $DEI." "Users interacting with this software do so entirely at their own risk"

DEI is "The global settlement currency of DEUS's Decentralized FIX" "Traders using DEI will enjoy better fee structures while trading derivatives on DEUS v3."

"DEI is an fractional reserve stablecoin, forked and inspired by frax.finance and can be used as a unit of account for derivative-based trading on protocols built on the DEUS infrastructure layer. Traders, Protocols and Market Makers utilizing and offering trading via DEUS v3 using $DEI as stablecoin will enjoy better Fee Structures, than when using $USDC."

"DEI has a 100% minting ratio and 9% seignorage. 100% USDC is required to mint $DEI (ie. $1 USDC is required to mint 1 $DEI). On mint, 9% is used to buy back $DEUS and deposited into the DEI redemption contract. On redemption, 9% is transferred out of the redemption contract. This figure adjusts constantly and can be viewed in the minter stats."

"A simple implementation error was introduced into the DEI token contract, in an upgrade last month. The burnFrom function was misconfigured, with the ‘_allowances’ parameters ‘msgSender’ and ‘account’ written into the contract in the wrong order.

This created a public (or pubic, according to Peckshield) burn vulnerability, which an attacker is then able to manipulate and gain control of DEI holders’ approvals and transfer assets directly to their own address.

The mis-ordered parameters allow the attacker to set a large token approval for any DEI holder’s address. Then, by burning 0 tokens from the address, the approval is updated to the attacker’s address, who can drain the holder’s funds."

"According to BlockSec’s MetaSleuth, the losses were approximately $5M on Arbitrum, $1.3M on BSC and $135k on Ethereum." "Token holders lost a total of ~$6.5M on Arbitrum, BSC and Etherum, and the DEI stablecoin depegged over 80%."

"An official update mentions a recovery plan for users who lost out in the exploit, and Deus have reached out to the attacker on-chain.

But given the account was originally funded via Tornado Cash on BSC, it’s not looking good."

"Luckily, the exploit on BSC was frontrun, and an on-chain message to the Deus Deployer shows the intent to return the funds. Other whitehats also sprang into action, and over $600k in USDC has so far been returned to a recovery multisig."

"For all white hackers that were able to rescue funds during the DEI exploit from today 05/05/2023 We are confirming 0x7f5ae1dc8d2b5d599409c57978d21cf596d37996 As a DEUS team owned multisig on Arbitrum. Please get in touch with us if you have not already."

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 - Deus Finance (DEI Stablecoin) Burn Vulnerability
Date Event Description
May 5th, 2023 11:52:45 AM MDT Exploit on Arbitrum The exploit occured on the arbitrum chain.
May 5th, 2023 11:53:35 AM MDT Exploit on Binance Smart Chain The exploit occured on the Binance smart chain.
May 5th, 2023 12:53:35 PM MDT Exploit on Ethereum The exploit occured on the ethereum chain.

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 $6,500,000 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

The total amount recovered is unknown.

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.

References

  1. ↑ Rekt - Deus DAO - R3KT (May 8, 2023)
  2. ↑ @adamb83024264 Twitter (May 8, 2023)
  3. ↑ @zellic_io Twitter (May 8, 2023)
  4. ↑ @0xProtosec Twitter (May 8, 2023)
  5. ↑ Deus DEI Exploiter | Address 0x189cf534de3097c08b6beaf6eb2b9179dab122d1 | Arbiscan (May 8, 2023)
  6. ↑ Arbitrum Transaction Hash (Txhash) Details | Arbiscan (May 8, 2023)
  7. ↑ @MetaSleuth Twitter (May 8, 2023)
  8. ↑ Address 0x5a647e376d3835b8f941c143af3eb3ddf286c474 | BscScan (May 8, 2023)
  9. ↑ Binance Transaction Hash (Txhash) Details | BscScan (May 8, 2023)
  10. ↑ Deus DEI Exploiter | Address 0x189cf534de3097c08b6beaf6eb2b9179dab122d1 | Etherscan (May 8, 2023)
  11. ↑ Ethereum Transaction Hash (Txhash) Details | Etherscan (May 8, 2023)
  12. ↑ @peckshield Twitter (May 8, 2023)
  13. ↑ @DeusDao Twitter (May 8, 2023)
  14. ↑ @DeusDao Twitter (May 8, 2023)
  15. ↑ @DeusDao Twitter (May 8, 2023)
  16. ↑ @hippo_potato Twitter (May 8, 2023)
  17. ↑ https://www.coingecko.com/en/coins/dei-token (Oct 26, 2022)
  18. ↑ https://deus.finance/ (Oct 26, 2022)
  19. ↑ New to DEUS? - DEUS Finance Gitbook (May 8, 2023)
  20. ↑ https://app.dei.finance/dashboard (Oct 26, 2022)
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