The trillion aBNBc exploit in the ANKR protocol has been extended to several other crypto platforms. Protocol administrators identified the perpetrator and established a recovery plan to compensate affected parties.
The ANKR team focused on a former team member as the muscle behind the exploit. The individual conducted a supply chain attack with malicious code that compromised their private key.
On-chain analysis revealed that the perpetrator could mint new aBNBc tokens on the blockchain; He then moved them to other platforms like Binance and HAY Protocol to launder the stolen funds.
aBNBc is a reward-carrying token in the protocol; The tokens will be appreciated as they accumulate more rewards. They give the token to users who wager BNB as proof of their engagement.
5/ We would like to thank our community for the continued support during this time. We are still working to ensure all affected and identified users have been compensated.
Ankr team đź’™
— Ankr Staking (@ankrstaking) December 20, 2022
Take advantage of the impact and recovery plan
The aBNBc blockchain money trail revealed that the former employee laundered the stolen funds into Tornado Cash, Hay Protocol and Binance.
The fresh liquidity decoupled the HAY stablecoin and aBNBc prices fell 99% to $0.2113. On the other hand, the price of ANKR remained relatively stable.
Binance CEO Changpeng Zhao noted that they would freeze all accounts related to the exploit pending investigation.
The main criterion behind the recovery plan is to compensate all “clean” users at the time of the exploit. Therefore, they would exclude arbitrage traders who exploited the exploit from the recovery program.
In response, the team scanned the blockchain to tag all aBNBc token holders. Then, using the snapshot, they air-dropped a new ankrBNB token to all affected holders and began formulating a new recovery plan.
The Helio protocol took a major hit when the culprit aBNBc traded HAY destablecoin. As of December 8, 2022, log custodians had purchased 6,843,323 HAY on DEXs out of 17,747,582 HAY accumulated bad debts. The efforts pushed HAY’s price up to $0.98.
The Guardians also burned HAY 6 million days later. Despite this, they managed to buy back $3 million in bad debt.
On December 9, custodians airdropped ankrBNB into wallets containing aBNBc and aBNBb. They also completed airdrops for Ellipsis Finance, Pancakeswap, ApeSwap, ACryptoS, Wombat, Beefy FInance, Wombex, Magpie, and Quoll.
On December 12, custodians airdropped BNB to the wallet address holding BNB via aBNBb or aBNBc liquidity pools.
The custodians promised to fully match about 14,407 BNB to the Wombat liquidity pool by Dec. 19.
Log administrators are working with law enforcement to hold the former employee accountable.
To prevent such an event, the RPC provider implements multi-sig authentication and timeouts on all updates to avoid a single point of failure. They will also work on staff background checks and redefine the terms of cooperation with the DeFi protocols.
Helio Protocol, HAY’s custodian, will resume liquidation functions for the bad actors as users have no collateral to back their position. They will also work on implementing new design features to prevent such exploits from affecting them again.
Final Thoughts
We can trace the vulnerability in the ANKR exploit to their internal HR processes and security measures. A chain is only as strong as its weakest link.
The exploits served as a lesson for all affected parties, who mentioned that they would update their logs to protect their communities from similar exploits.
At press time, the HAY destablecoin is trading at $0.997 after two weeks of deleveraging.
ANKR/USD chart.
On the day of the exploit, the ANKR price was $0.02147. It is now trading at $0.01753, down 15% from the day of the exploit.
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