Saffron Finance Lock Up

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Saffron Finance

The Saffron Finance smart contract had a bug which caused a large quantity of fund to be "locked up" when wrong inputs were supplied. Advanced functions had to be used to recover funds.

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

About Saffron Finance

"Saffron Finance launched November 1st, 2020." "Saffron Finance is a DeFi asset mortgage platform released by an anonymous team." "[L]iquidity providers have access to dynamic exposure by selecting customized risk and return profiles." The "protocol [enables] tokenizing on-chain assets, including contracts that otherwise impair access to utilized capital. Tokenized ownership of on-chain assets gives liquidity providers greater flexibility and uninterrupted access to their underlying collateral while enabling leveraged staking and bespoke risk management." "The token is SFI, allowing liquidity providers to select customized risk exposures to obtain returns. In each cycle, users can choose different risk-return combinations (A, AA, S) on Saffron to provide liquidity. A cycle of 14 days (LP locks within 14 days). After the cycle ends, users can remove liquidity and obtain Interest and prorated SFI."

"Saffron Finance issued an announcement stating that Epoch 1 redemption errors caused by contract loopholes resulted in 50 million DAI deposits deposited by Epoch 1 being locked for 8 weeks. The team is currently working on an emergency fix to solve this problem and will transition to Epoch 2."

"Please be aware that a bug has caused an error redeeming from epoch 1, for everyone who has liquidity waiting to be redeemed from epoch 1, we're working on a fix now. A statement will be released soon with more details. Thank you for your patience as we transition into epoch 2 Hot springs."

"[T]here was a function exposed to the public that could be called to create a new epoch on the contract. Saffron is close to becoming fully decentralized and having as many functions publicly accessible as possible is key to creating a decentralized autonomous system. That function had a bug such that writing specific inputs into it would lead to a contract state where no one could withdraw funds from epoch 1. At that point, everything was stuck in the contract, and would remain there until we were able to recover what we could."

"There were 3 affected contracts: The Saffron DAI pool (~15,000 SFI). The Saffron DAI/Compound Adapter (~$53,000,000 worth of cDAI). The Saffron SFI/ETH Uniswap LP Staking Pool (~$4,000,000 UniV2)."

"For full transparency, we will be making the Epoch1 FundRescue GitHub repo public, and offering a 10 SFI bounty for any bug or issue that could lead to unexpected loss of user funds." "The rescue should be done within 12 hours of the code being posted, assuming reviewers are able to adequately look it over in time, keeping in mind the code was reviewed in private as we worked through various solutions over the past 2 days." "Our epoch 1 recovery process has been made public and can be found on GitHub." "We were able to identify the issue quickly and resolve it within 3 days by creating a rescue contract and deploying it successfully to return almost all of the 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 - Saffron Finance Lock Up

Date	Event	Description
November 29th, 2020 12:00:00 AM	Main Event	Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here.

Total Amount Lost

The total amount lost has been estimated at $57,000,000 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?

Prevention Policies

The security on smart contracts is comparable to hot wallets. In addition to funds being exploited, one has to consider the risk of funds being locked up.

In general, a properly set up offline multi-signature storage can be considered more secure.