Dora Factory ChainSwap Exploit

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Dora Factory

Dora Factory is a service which assists in creating decentralized governance. Their token used ChainSwap to exist on multiple blockchains, which required some funds to be stored in the smart contract hot wallet.

The ChainSwap bridge was hacked, and the attacker was able to obtain the tokens, which were sold. Dora has been working with ChainSwap to reimburse any affected users.

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

About Dora Factory

"The DAO-as-a-Service Infrastructure for Decentralized Governance and Open Source Ventures." "Dora Factory is a programmable, multi-chain DAO-as-a-Service open infrastructure on Substrate. Crucial schemes like quadratic voting, bonding curve fundraising, all cool features regrading on-chain governance can be built on this infrastructure as pallets by the developers, and they can be rewarded in a SaaS model when DAOs launched on Dora Factory deploy them."

"Dora Factory is governed by DORA holders. DORA will be the utility token that binds the network together. Users and holders of DORA can stake, mine and pay DORA tokens. Developers who build will be rewarded with DORA tokens." "Dora Factory’s vision is to build a DAO-as-a-Service infrastructure that empowers every DAO with the right toolkits for better interoperability and incentivizes open source developers and hackers on the web. their next venture-building path."

"ChainSwap is a bridge protocol that links the Ethereum and Binance Smart Chain (BSC) blockchains." "It supports Binance Smart Chain, Ethereum, Polygon, and Huobi Eco Chain." "The ChainSwap hacker identified and exploited a vulnerability in the ChainSwap smart contract. This vulnerability enabled them to steal and mint new tokens for various protocols that were using the bridge to trade across Ethereum and BSC."

Investigation by ChainSwap revealed "a bug in the token cross-chain quota code. The on-chain swap bridge quota is automatically increased by the signature node, which is intended to be more decentralized without manual control. However, due to a logical flaw in code, this led to an exploit by allowing invalid addresses which weren’t whitelisted to automatically increase the amount."

"According to official sources, due to a contract vulnerability in the cross-chain asset bridge ChainSwap, 7872 DORA locked in the ChainSwap cross-chain bridge contract was taken out by hackers and sold through Uniswap." "Today, sadly ChainSwap was cracked again by a black-hat hacker. This time, DORA tokens on ChainSwap bridges were affected. 7872 DORA tokens were stolen from the ChainSwap bridge smart contract and they were immediately sold on Uniswap."

"The attacker managed to take control of the projects’ BSC contracts by exploiting ChainSwap. The attacker minted tokens directly to their address, then sold them on BSC’s most popular decentralized exchange, PancakeSwap." "[T]he attacker used the PancakeSwap exchange to convert the stolen tokens to WBNB, DAI, and other tokens."

"For now, we will work with ChainSwap team on this issue and find a solution to the problems in the coming week. (ChainSwap team is actively solving the problems now, give them some time!). We will make an announcement once we have a final solution."

"Chainswap temporarily closed its cross-chain bridge." "ChainSwap worked with the police and OKEx to identify the attackers, and managed to negotiate the recovery of Corra and Rai tokens. An initial email with the attackers suggested the attackers return $1 million."

“Sorry for the trouble, you sound genuinely like great people but money is money,” the attackers of the earlier exploit told ChainSwap.

"ChainSwap team contacted [Dora Factory] and briefed the situation. They are actively tracking the hacker’s address and promised to work [together] to deliver a solution to cover the loss of Dora Factory foundation and our community as soon as they can."

"Comparing to the current FDV market cap of Dora Factory, the loss of DORA on ChainSwap bridge attack is not significant (worth less than $50k). Most of the tokens were assets owned by the Foundation, and they were used to create cross-chain liquidities. This event will not affect the development of Dora Factory in any foreseeable way (definitely no need to panic!)."

"However, we do recognize that cross-chain technology is early-stage and it is far from being mature. As a result of this event, we will temporarily withdraw all cross-chain Defi liquidities until we have a verifiably secure solution (either a new cross-chain service provider, or develop our own cross-chain infrastructure)."

"Chainswap said it had already repurchased a small amount of the affected tokens from the market and returned the contract wallet. The rest will be paid out in full by the Chainswap vault." "ChainSwap team has now prepared and executed a compensation plan in consensus with the affected projects." "In order to bring everybody a more rigorous, efficient bridge, the next development model of ChainSwap will be adjusted to ensure maximum safety."

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 - Dora Factory ChainSwap Exploit

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 $42,000 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

Theoretically, decentralized finance will eventually result in hackers having exploited every vulnerability that exists. However, it's impossible to know when that will occur and if a contract is truly secure, as opposed to there still being an exploit that just hasn't been noticed yet. For any complex smart contract, it's impossible to prove security and plenty of fully audited contracts have been exploited.

In this situation, there was luckily not much taken, and it looks like it will be ultimately reimbursed. Platforms should, generally, be prepared for the full loss of all assets stored in hot wallets (including smart contracts). Assets that do not need to be accessed quickly should be stored securely in a simple 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.