Ribbon Finance Accounting Bug

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Ribbon Finance

Ribbon Finance realized on November 23rd that, due to a bug in their smart contract, users were being overcharged. The platform compensated affected users in full based on what was overcharged.

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

About Ribbon Finance

"SUSTAINABLE ALPHA FOR EVERYONE" "Earn yield on your cryptoassets with DeFi's first structured products protocol." "Ribbon Finance is a new protocol that helps users access crypto structured products for DeFi. It combines options, futures, and fixed income to improve a portfolio's risk-return profile."

"Theta Vault, which is a yield-focused strategy on ETH and WBTC. The vault earns yield on its deposits by running a weekly automated options selling strategy. The vault reinvests the yield earned back into the strategy, effectively compounding the yields for depositors over time."

"Ribbon's v1 and v2 Theta Vault contracts are audited. Despite the audits and security measures we have taken, we advice users to exercise caution and to not risk funds they are not willing to lose." Audits were found provided by Quantstamp, ChainSafe (2 audits), Peckshield, and OpenZeppelin. "We have an ongoing bug bounty on ImmuneFi, with up to $50,000 of bounty. The contracts that are included in the bounty are ETH and WBTC Theta Vaults."

"We recently found a small accounting bug in the Ribbon V2 contracts that charged users an additional week of fees when they were not supposed to be." "The total amounts were 11.79 ETH, 0.18 WBTC and 0.55 AAVE."

"The issue is that users were charged management fees upfront on the week they first deposited their funds. For example, if a user deposits on Thursday, they should only be charged fees on the following week’s Friday because their funds were utilized to write options and earn premiums. The undesirable behavior was that the users were charged the fees upfront."

"The vaults were charging an additional week of fees, even when users' funds were not deployed into the options contracts."

"This means that all V2 users would have been charged an additional week of fees when they should not have been."

"We have written and deployed the fix on the three v2 vaults, ETH, WBTC and AAVE. This ensures that new users are not overcharged."

"We just reimbursed all affected users." "We have distributed the fees back to all the affected users, and all V2 users should get back a rebate into their account." "Next, we used the erroneously collected fees from the DAO to deposit into the vaults. We then distributed the compensation amounts in vault tokens to all users who were affected." "The DAO Treasury has initiated a series of transactions to compensate for losses due to this bug, and the fix is deployed to the vaults so this does not happen again."

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 - Ribbon Finance Accounting Bug

Date	Event	Description
November 23rd, 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 $62,000 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?

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.