Hope Finance Scam Leaves Prospective DeFi Users Out of Pocket
Terrill Dicki Feb 22, 2023 09:38
Arbitrum-based algorithmic stablecoin startup Hope Finance loses $2 million to a smart contract attack.
After the discovery of a vulnerability with a value of $2 million, potential customers of an Arbitrum-based decentralized finance (DeFi) effort have been left without any financial remedy. This is because the vulnerability has been exploited.
On February 21, the Hope Finance Twitter account warned clients about the fraud, which prompted the Web3 security company CertiK to raise the alarm about the situation.
It is quite challenging to get any information on the project. A Twitter account for the platform was established in January of 2023, and on that account, information was published on the network's plans to build an algorithmic stablecoin that would be dubbed Hope token. This information was provided on the Twitter account (HOPE). The amount of Ether that is now being exchanged for one unit of HOPE causes real-time modifications to be made to the supply of the HOPE coin (ETH).
"It would seem that the con artist modified with the TradingHelper contract, which meant that the money were delivered to the con artist every time 0x4481 called OpenTrade on the GenesisRewardPool." This includes the erroneous application of a modifier as well as the potential of reentrancy attacks. Cognitos discovered that the smart contract code was still able to pass the audit with flying colors, despite the fact that these vulnerabilities had been identified and pointed out.
As a reaction to the fraudulent behavior, Hope Finance disseminated information to its users, which provided them with the possibility to remove staked currency from the protocol by making use of an emergency withdrawal option.
Arbitrum is a roll-up network that was built on top of Ethereum's layer 2 and has the potential to enable smart contracts to expand in an exponential form. This potential was discovered when the network's creators saw that Ethereum's layer 2 was lacking in roll-up capabilities.
Optimism and the other layer-2 protocols are continue to deal with an ever-increasing amount of transactions inside the Ethereum ecosystem. The ability to maintain a positive outlook is one of these protective strategies.
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