HYDT Protocol Token Price Manipulation Attack

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HYDT Protocol Logo/Homepage

HYDT Protocol offers a stablecoin capable of generating an apparent 30% APY. Despite an audit by Cyberscope, the protocol was able to launch with a price vulnerability which allowed for manipulation. The protocol was exploited on October 9th, which resulted in the price massively dropping and a $58k profit being generated to the exploiter. The exploit was fixed and the protocol relaunched, restoring close to the original peg. The protocol promised to reimburse all affected users.[1][2][3][4][5][6][7][8][9][10][11][12]

About HYDT Protocol

"Earn 30%+ APY on your stablecoin. HYDT Protocol offers high and attractive returns on your stablecoins. Anyone can earn 30%+ APY by purchasing HYDT stablecoin on pancakeswap or any other exchange and depositing it into the protocol, making it one of the most attractive APYs in the industry.

Flexible and Durable Soft Peg Mechanism. HYDT, the stablecoin of the HYDT protocol, has it's unique and flexible automated soft peg mechanism to keep HYDT close to 1USD while avoiding critical damage to the protocol even under the most extreme market conditions, which never stops working until HYDT regains its peg to the USD in case of a depeg.

Earning yield made easy. You just need to buy HYDT on the market and make a deposit to start earning yield on HYDT stablecoin, enjoy high returns without worrying about liquidation and complicated operations!"

"HYDT Protocol is audited by Cyberscope."

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

"A suspicious attack involving HYDT tokens has occurred on BSC, resulting in a loss of approximately $58,000."

Key Event Timeline - HYDT Protocol Token Price Manipulation Attack
Date Event Description
October 9th, 2024 10:49:47 PM MDT Blockchain Transaction The transaction on the BNB blockchain.
October 10th, 2024 4:37:00 AM MDT Promotional Tweet Posted The HYDT blockchain posts a promotional tweet about HYDT being a "gateway to earning through staking, while $HYDT provides stability as a stablecoin".
October 11th, 2024 2:14:00 AM MDT Vulnerability Announced The HYDT team announces the vulnerability has been discovered.
October 14th, 2024 3:06:00 AM MDT Timing Analysis Posted The HYDT protocol team posts an analysis of the exploit including the transaction.
October 16th, 2024 5:04:00 AM MDT Restoration Announcement The protocol is announced as being restored and "[u]sers can now buy and sell $HYDT normally".
October 16th, 2024 10:18:06 PM MDT Blockchain Threat Analysis The Blockchain Threat Analysis posts an update with exploits for the past week.
October 18th, 2024 3:54:00 AM MDT Another Protocol Promotion Another tweet is posted which promotes the HYDT protocol.

Technical Details

"A suspicious attack involving HYDT tokens has occurred on BSC, resulting in a loss of approximately $58,000."

"The attacker borrowed $12 million via a flash loan, buying 6,735 $BNB on our price source ($BNB-$USDT), creating significant price impact.

The attacker minted 60,961.92 $HYDT by sending 11 BNB to our Reserve Contract, then sold the tokens on the open market before returning the loan."

Total Amount Lost

The total amount lost has been estimated at $58,000 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

"We've discovered a critical issue with the $HYDT mint function that has been exploited, allowing a hacker to mint $HYDT at a low price.

This has led to a significant dump of $HYDT stablecoins at artificially deflated prices.

We advise against buying or selling $HYDT Stablecoin at this time.

Affected $HYDT staking users will receive full compensation.

Thank you for your understanding. We’ll keep you updated."

Ultimate Outcome

"We’re pleased to report that $HYDT has mostly regained its peg to the $USDT now

Users can now buy and sell $HYDT normally

The mint function is still being updated to prevent future flash loan attacks and remains unavailable for now.

Also, the $HYDT peg system will resume soon.

We are so sorry for the inconvenience this must have caused you

Thank you for your patience and support always."

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. ↑ HYDT (Accessed Nov 6, 2024)
  2. ↑ HYDT Protocol Overview | HYDT Protocol Document (Accessed Nov 6, 2024)
  3. ↑ Audit | HYDT Protocol Document (Accessed Nov 6, 2024)
  4. ↑ BNB Smart Chain Transaction Hash (Txhash) Details | BscScan (Accessed Nov 6, 2024)
  5. ↑ https://www.coingecko.com/en/coins/hydt (Accessed Nov 6, 2024)
  6. ↑ HYDT PROTOCOL Price Today - HYDT to US dollar Live - Crypto | Coinranking (Accessed Nov 6, 2024)
  7. ↑ @HydtProtocol Twitter (Accessed Nov 6, 2024)
  8. ↑ @HydtProtocol Twitter (Accessed Nov 6, 2024)
  9. ↑ @HydtProtocol Twitter (Accessed Nov 6, 2024)
  10. ↑ @HydtProtocol Twitter (Accessed Nov 6, 2024)
  11. ↑ @HydtProtocol Twitter (Accessed Nov 6, 2024)
  12. ↑ BlockThreat - Week 41, 2024 (Accessed Nov 6, 2024)
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