10 Quick and Dirty Facts about the bZx Hacks

Quantstamp Announcements
February 27, 2020

10 Quick and Dirty Facts about the bZx Hacks


These facts are brought to you by Quantstamp, a leading DeFi security company. 

#1  The 1st hack used Tornado Cash to stay anonymous (source)

#2  The 2nd hack used ShapeShift to stay anonymous (source 1) (source 2) . 

#3  Both hacks were each carried out in a single atomic transaction (attack 1) (attack 2).

#4  5 money legos and over 25 contracts were used in the 1st hack (source).

The first hack interacted with 5 different protocols (Kyber, Uniswap, dYdx, bZx and Compound) and over 25 smart contracts; this highlights the massive composability of these money legos. This all took place in a single transaction.  

#5  Flash loans were used in both hacks, but they worked as intended. 

Flash loans were never exploited. Their purpose in the attacks were to provide the attackers with enough capital to produce massive slippage in low liquidity DEX markets.  

#6  The 1st attack was not an oracle attack. 

Uniswap was targeted in the 1st attack, but Uniswap was targeted because it was vulnerable to slippage, not because it was used as a price oracle. 

#7  The 2nd bZx attack was an oracle attack. 

bZx made the mistake of calculating the value of collateral within their system using DEX price oracles. The attacker took advantage of this by causing massive slippage in sUSD DEX markets in order to temporarily inflate the value of sUSD calculated within the bZx system. Once the attacker took out the loan, the position was instantly “underwater” because of the inflated value of the collateral. 

#8  Each hack left an underwater position open in bZx. 

A loan is underwater when the value of the collateral is not enough to cover the outstanding debt of the loan. The 1st bZx hack instantly left a position underwater by approximately 640,000 USD worth of cryptocurrency. The 2nd bZx hack instantly created a position that was underwater by approximately  800,000 USD. 

#9  bZx’s flash loan was used in the 2nd hack  

In the second attack, the attacker used bZx’s flash loan feature. The first attack used dYdX’s flash loan feature.

#10  These hacks may have been conducted by two different people. 

There is no evidence that these attacks were conducted by the same person. 

--

For more Quantstamp news or anything QSP crypto or QSP coin related, check out Quantstamp Reddit and QSP Twitter.



Get your DeFi app secured by Quantstamp
Secure Now!
June 16, 2020

4 Myths about Ethereum 2.0

Ethereum 2.0, a long-awaited upgrade to Ethereum, is planning to be launched this year. More than a simple update or hard fork, it is an entirely new blockchain which runs on a Proof-of-Stake system. There’s a lot of talk and speculation about Ethereum 2.0. In this post, we highlight 5 easily held misconceptions about this next stage of Ethereum.

June 3, 2020

Understanding Phase 0, The Current Stage of ETH 2.0 Development

Most information about ETH 2.0 development is either highly technical or excessively general. We wrote this post to clear up any confusion regarding the status of ETH 2.0 development.

June 2, 2020

Quantstamp Community Update - May 2020

Auditing ETH 2.0, Gitcoin NYBW Hackathon, Solidity Summit, here's what happened at Quantstamp in May.

May 28, 2020

How to Be an ETH 2.0 Validator on the Topaz Testnet

The Topaz Testnet is a public Ethereum 2.0 testnet created by Prysmatic Labs. It is a testnet version of Ethereum 2.0 Phase 0 which is planned to launch on mainnet later this year. Anyone can participate in the Topaz Testnet as a validator, and this article will walk you through the process.