DAFI Protocol ChainSwap Attack

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!

DAFI Profocol

The DAFI protocol smart contract for cross-chain swapping had a vulnerability, which allowed $200,000 to be removed.

The protocol has agreed to a buyback to reimburse those affected.

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

About DAFI Profocol

"DAFI is building an entirely new incentive model for every protocol & application. Today, everything decentralized relies on inflation, an example is miners earning Bitcoin in return for maintaining the Blockchain. Incentives are the core DNA of everything decentralized - without it nothing can truly scale. DAFI creates limitless applications with reduced inflation, by replacing simple token rewards with dTokens. As a network grows in demand, dTokens distributed to users can increase in quantity. Essentially, DAFI converts demand volatility into user rewards. This enables you to truly become a part of the economies you love."

"DAFI reinvents every network within the blockchain space by minimizing the effects of low demand. Super Staking uses dTokens as a rewards mechanism that significantly reduces the number of native tokens released into circulation." "Every decentralized network can now maximize reward distributions based on their demand. Creating limitless applications that support reduced inflation & user growth."

"Galaxy-class developers, academics, and industry experts building on the DAFI thesis, dedicated to reshape the current inflation model inspired by the 2018 market flaws."

"At DAFI Protocol, we continue to expand the utility of our state-of-the-art smart synthetics technology to solve one of the biggest challenges in the blockchain industry, hyperinflation. With the launch of Super Staking, a new realm of possibilities are opening up to finally convert market-demand volatility into user rewards."

"While market participants rush to ‘Super Stake’ their $DAFI tokens, more decentralized networks have ‘Switched to DAFI.’ We have also launched a liquidity program to allow Dafinauts to easily trade with a comfortable market liquidity."

"After months upon months of hard work and dedication, we have finally launched Super Staking. The new platform can be thought of as Staking 2.0, where users receive dTokens rewards for their locked up holdings, which grow alongside the network."

"DAFI Protocol, via its official Twitter handle, disclosed the exploitation of its ChainSwap Bridge by unknown hackers." "According to official sources, DAFI Protocol, an on-chain incentive protocol, stated that DAFI worth 200,000 US dollars was sold due to the “cross-chain asset bridge ChainSwap attack”. DAFI Protocol requests the community to withdraw liquidity from Uniswap and LP plans until further notice. DAFI Protocol added that the DAFI token contract and Super Staking are safe."

"As a result of the hack, $200,000 DAFI was stolen, and the token has slumped by 22.8% in the last 24 hours."

"Despite this, in the last month alone we have launched Super Staking and achieved record-breaking value locked within the first week. We will continue to get stronger, this will not slow us down."

"The recent ChainSwap hack which resulted in the loss of about $200,000 in DAFI tokens had no effect on DAFI’s Super Staking. However, to protect DAFI’s community members’ interest and also to bear the brunt of the stolen tokens, DAFI has disclosed plans to commence a token buyback event." "The buyback will take place on the open market for six months. It is also important to point out that, despite the hack, DAFI has been growing stronger with several amazing milestone achievements."

"The DAFI token contracts and Super Staking are safe. We're as strong ever despite the exploit of a third party. To show our commitment, we will be performing a buyback on the open market and vesting the $DAFI for 6 months."

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 - DAFI Protocol ChainSwap Attack

Date	Event	Description
July 11th, 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 $200,000 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

All smart contracts are hot wallets which may contain vulnerabilities.

The most secure method of storage for crypto-assets is an offline multi-signature wallet.

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.