KyberSwap attacker used ‘infinite cash glitch’ to empty funds: DeFi knowledgeable

The attacker who drained $46 million from KyberSwap relied on a “advanced and thoroughly engineered good contract exploit” to hold out the assault, based on a social media thread by Ambient change founder Doug Colkitt. 

Colkitt labeled the exploit an “infinite cash glitch.” In keeping with him, the attacker took benefit of a novel implementation of KyberSwap’s concentrated liquidity characteristic to “trick” the contract into believing it had extra liquidity than it did in actuality.

1/ Completed a preliminary deep dive into the Kyber exploit, and suppose I now have a fairly good understanding of what occurred.

That is simply probably the most advanced and thoroughly engineered good contract exploit I’ve ever seen…

— Doug Colkitt (@0xdoug) November 23, 2023

Most decentralized exchanges (DEXs) present a “concentrated liquidity” characteristic, which permits liquidity suppliers to set a minimal and most value at which they’d supply to purchase or promote crypto. In keeping with Colkitt, this characteristic was utilized by the KyberSwap attacker to empty funds. Nevertheless, the exploit “is restricted to Kyber’s implementation of concentrated liquidity and doubtless won’t work on different DEXs,” he stated.

The KyberSwap assault consisted of a number of exploits towards particular person swimming pools, with every assault being practically similar to each different, Colkitt stated. For example the way it labored, Colkitt thought of the exploit of the ETH/wstETH pool on Ethereum. This pool contained Ether (ETH) and Lido Wrapped Staked Ether (wstETH).

The attacker started by borrowing 10,000 wstETH (price $23 million on the time) from flash mortgage platform Aave, as proven in blockchain information. In keeping with Colkitt, the attacker then dumped $6.7 million price of those tokens into the pool, inflicting its value to break down to 0.0000152 ETH per 1 wstETH. At this value level, there have been no liquidity suppliers prepared to purchase or promote, so liquidity ought to have been zero.

The attacker then deposited 3.4 wstETH and supplied to purchase or promote between the costs of 0.0000146 and 0.0000153, withdrawing 0.56 wstETH instantly after the deposit. Colkitt speculated that the attacker could have withdrawn the 0.56 wstETH to “make the next numerical calculations line up completely.”

After making this accretion and withdrawal, the attacker carried out a second and third swap. The second swap pushed the worth to 0.0157 ETH, which ought to have deactivated the attacker’s liquidity. The third swap pushed the worth again as much as 0.00001637. This, too, was outdoors of the worth vary set by the attacker’s personal liquidity threshold, because it was now above their most value.

Theoretically, the final two swaps ought to have completed nothing, because the attacker was shopping for and promoting into their very own liquidity, since each different consumer had a minimal value set far beneath these values. “Within the absence of a numerical bug, somebody doing this could simply be buying and selling forwards and backwards with their very own liquidity,” Colkitt said, including, “and all of the flows would web out to zero (minus charges).”

Nevertheless, as a consequence of a peculiarity of the arithmetic used to calculate the higher and decrease sure of value ranges, the protocol did not take away liquidity in one of many first two swaps but in addition added it again throughout the ultimate swap. In consequence, the pool ended up “double counting the liquidity from the unique LP place,” which allowed the attacker to obtain 3,911 wstETH for a minimal quantity of ETH. Though the attacker needed to dump 1,052 wstETH within the first swap to hold out the assault, it nonetheless enabled them to revenue by 2,859 wstETH ($6.7 million at at this time’s value) after paying again their flash mortgage.

The attacker apparently repeated this exploit towards different KyberSwap swimming pools on a number of networks, ultimately getting away with a complete of $46 million in crypto loot.

Associated: HTX exchange loses $13.6M in hot wallet hack: Report

In keeping with Colkitt, KyberSwap contained a failsafe mechanism inside the computeSwapStep perform that was meant to forestall this exploit from being doable. Nevertheless, the attacker managed to maintain the numerical values used within the swap simply outdoors of the vary that will trigger the failsafe to set off, as Colkitt said:

“[T]he ‘attain amount’ was the higher sure for reaching the tick boundary was calculated as …22080000, whereas the exploiter set a swap amount of …220799999[.] That reveals simply how fastidiously engineered this exploit was. The verify failed by <0.00000000001%.”

Colkitt referred to as the assault “simply probably the most advanced and thoroughly engineered good contract exploit I’ve ever seen.”

As Cointelegraph reported, KyberSwap was exploited for $46 million on Nov. 22. The crew discovered a vulnerability on Apr. 17, however no funds had been misplaced in that incident. The change’s consumer interface was also hacked in September final 12 months, though all customers had been compensated in that incident. The Nov. 22 attacker has knowledgeable the crew they’re prepared to barter to return a few of the funds.