Minswap Liquidity Draining Vulnerability

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' section 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!

Minswap Homepage/Logo

Minswap, a decentralized exchange (DEX) on the Cardano blockchain, is known for its community-centric approach, where $MIN tokens are fairly distributed without private or VC investment. Operating as a mobile-friendly DEX, Minswap allows users to earn liquidity provider rewards through swap fees and farm MIN tokens by staking Liquidity Pool Tokens. Despite being a prominent decentralized finance application with a total value locked (TVL) of $28.45 million, Minswap faced potential vulnerabilities. In March 2022, a security audit by Tweag uncovered and addressed 13 bugs, including critical and high-severity issues. However, in a subsequent examination by the WingRiders team, additional critical vulnerabilities were discovered, leading to Minswap entering maintenance mode to address these issues and ensure user funds' safety.

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

About Minswap

"A Sassy UnderCat in Space. A decentralized exchange governed by a community that zaps."

"Earn Liquidity Providers that deposit both assets of a pair are rewarded with swap fees."

"Farm MIN tokens are rewarded to Liquidity providers who stake their Liquidity Pool Tokens."

"Zap-In Provide Liquidity with one token of the pair."

"A Mobile-native Wallet The Most Mobile Friendly DEX on Cardano Blockchain."

"Minswap is a Decentralized Exchange (DEX). The purpose of a DEX is to enable permissionless trading of token pairs. For each swap, a fee is taken, which goes to the Liquidity Providers (LPs). Anyone can provide Liquidity as well, hence profits are decentralized. Minswap is a community-centric DEX, in that $MIN tokens are fairly distributed, without any private or VC investment. Minswap has pioneered several ideas in the Cardano ecosystem such as the FISO model (touted as the fairest ISO model in the Cardano community) or a focus on Protocol Owned Liquidity."

"Minswap is the most prominent decentralized finance application on the Cardano blockchain with a total value locked (TVL) of $28.45 million."

"Our tokens are fairly distributed without any private or VC investment. This ensures our community of users are maximally rewarded, not speculators and insiders."

"In mid-September 2021, there was an Alonzo hard fork. In March 2021, the first major hack on the decentralized exchange MinSwap could have occurred, but thanks to the vigilance and professionalism of the WingRiders team, it did not."

"On January 21, 2021, the team announced that smart contracts will undergo a security audit by Tweag. Tweag is a software innovation lab specialized in Haskell development for fintech applications and platforms. The auditors found a total of 13 bugs, including 3 with severity Critical and two with severity High."

"The MinSwap team released an article on Medium on February 21, 2021, stating that the audit is complete and all bugs have been addressed. Subsequently, the exchange was launched on the Cardano main-net on 9 March. In a relatively short time, Total Value Locked (TVL) reached almost $200M."

"On March 19, the team announced that both smart contracts and the audit report are open-sourced available on GitHub. All interested parties could take a look at the source code of the smart contracts and the WingRiders team enters the scene.

The WingRiders team noticed a few bugs when examining smart contracts. Multiple bugs were critical. The WingRiders team tried to contact the MinSwap team on March 21 in the UTC evening and notified them of critical vulnerabilities that would allow someone to drain all the liquidity in the smart contracts."

"The team responded to WingRiders’s notification in the morning. Even though the MinSwap team knew there was a critical vulnerability in the code, they left the exchange running for several hours. On March 22 in the evening, the team announced that the MinSwap exchange would go into maintenance mode. The published reason was that several issues were found that needed to be fixed. Users were not able to swap, withdraw and harvest their yield farming rewards. The team ensured users that funds are SAFU!"

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 - Minswap Liquidity Draining Vulnerability

Date	Event	Description
January 21st, 2021	Security Audit Announced	"On January 21, 2021, the team announced that smart contracts will undergo a security audit by Tweag. Tweag is a software innovation lab specialized in Haskell development for fintech applications and platforms. The auditors found a total of 13 bugs, including 3 with severity Critical and two with severity High."
February 11th, 2021 7:30:54 AM MST	Audit Resolutions Announced	"Today, Minswap is excited to announce that in anticipation of our launch, the external security audit of our DEX’s Smart Contract by Tweag is now complete. The audit ensures key system components are built to specification and bugs are found and eliminated in a transparent way."
March 19th, 2021	Open Source Available	"the team announced that both smart contracts and the audit report are open-sourced available on GitHub. All interested parties could take a look at the source code of the smart contracts and the WingRiders team enters the scene."
March 21st, 2021	Notification Critical Vulnerabilities	"The WingRiders team tried to contact the MinSwap team on March 21 in the UTC evening and notified them of critical vulnerabilities that would allow someone to drain all the liquidity in the smart contracts."
March 26th, 2022 2:21:15 AM MDT	Video Published	A YouTube video is published outlining the vulnerabilities that were found and resolved.
March 22nd, 2024 8:23:00 PM MDT	Maintenance Mode	"On March 22 in the evening, the team announced that the MinSwap exchange would go into maintenance mode. The published reason was that several issues were found that needed to be fixed. Users were not able to swap, withdraw and harvest their yield farming rewards. The team ensured users that funds are SAFU!"

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

No funds were lost.

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?

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.