Shoebill Finance BTC Market Collateral Oracle Exploit
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Shoebill Finance offers a protocol to allow users to optimize their yield on decentralized assets. Users can gain additional assets via staking, and use those automatically to borrow additional assets. Unfortunately, there was a vulnerability present which allowed users to borrow more than they should have been able to. This was exploited to remove $1.52m USD from the protocol. Shoebill Finance has made continuous efforts to improve their protocol following the attack.[1][2][3][4]
About Shoebill Finance
"Shoebill Finance V2 (aka. Shoebill) is a decentralized finance (DeFi) protocol that provides leveraged investment services on multiple EVM networks and BTC layer2s. Investors borrow assets deposited in Shoebill to maximize the size of their investment and pay interest. The protocol aims to maximize users' returns by building and expanding a circular structure where investors and depositors mutually support each other's returns."
"Users can optimize their yield by borrowing BTC, ETH, STONE, METIS, MANTA, WEMIX, KLAY and then re-staking it to use as collateral to borrow more assets. This strategy allows users to earn yield rewards while minimizing liquidation risk."
"Shoebill V2 maximizes users' ability to leverage other projects for potential returns and redemptions. It provides users with more investment opportunities with relatively low risk by securing a competitive APY through leverage or utilizing BTC/ETH/STONE etc. as another investment opportunity."
"Shoebill V2 will expand with plans to integrate more LST (Liquid Staked Tokens) in the future to provide users with broader options."
The Reality
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- When the service was actually started (if different than the "official story").
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What Happened
"On Oct 31st, Collaterizable Leverage Lending Platform Shoebill Finance experienced a security incident affecting the BTC Market on the BOB chain. The incident stemmed from an unexpected interaction within the oracle configuration during the integration of solvBTC and solvBTC.BBN assets. This interaction inadvertently created an exploitable condition that was leveraged by the attacker through a multi-stage exploit."
| Date | Event | Description |
|---|---|---|
| October 31st, 2024 2:48:41 AM MDT | BOB Transaction | The malicious BOB transaction involved in the exploit. |
| November 1st, 2024 11:23:14 AM MDT | Medium Post Made | Shoebill Finance makes a post on Medium with an overview of the incident and path formward. |
Technical Details
"On Oct 31st, Shoebill Finance experienced a security incident affecting the BTC Market on the BOB chain. During the integration of new assets, solvBTC and solvBTC.BBN, a vulnerability was exploited, leading to unauthorized rate of borrowing of the fund."
"The incident stemmed from an unexpected interaction within the oracle configuration during the integration of solvBTC and solvBTC.BBN assets. This interaction inadvertently created an exploitable condition that was leveraged by the attacker through a multi-stage exploit."
"The attacker took advantage of the identified vulnerability and successfully borrowed funds with small amount of collateral from [multiple] Shoebill BTC Market addresses on BOB Chain."
Total Amount Lost
The total amount lost has been estimated at $1,520,000 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
"The attacker proceeded to transfer the stolen amount — totaling 19.512 wBTC and 1.597 tBTC — across multiple bridging protocols, including Meson, Orbiter, and Across, to move funds from the BOB chain to the ETH chain."
"Vulnerability Fix: The vulnerability in the oracle configuration has been resolved to prevent further exploitation."
"Security Review: We conducted a thorough review of our systems and have verified that other markets remain unaffected by this issue."
"Engagement with on-chain security firms: We are actively working with Cryptoforensic and AMLBot to trace the movement of stolen assets across various chains and bridges."
"Law Enforcement: We have reported this incident to law enforcement agencies and are cooperating with them to facilitate any potential recovery of the stolen assets."
"Shoebill Finance remains committed to transparency and security. We will continue to provide updates on this matter as we progress in our investigation and recovery efforts. Our top priority is ensuring the safety and trust of our community."
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.
References
- ↑ Shoebill Finance Incident Report — BTC Market on BOB Chain | by Shoebill Finance | Nov, 2024 | Medium (Accessed Dec 4, 2024)
- ↑ Shoebill Finance (Accessed Dec 4, 2024)
- ↑ Shoebill Finance V2 | Shoebill Finance (Accessed Dec 4, 2024)
- ↑ BOB transaction 0xa6e181ea893bfbe2427fd9bca31e1f106d9913882b9f6b0776299e0f456b3c92 (Accessed Dec 4, 2024)