$4 400 000 USD

FEBRUARY 2022

GLOBAL

METER.IO

DESCRIPTION OF EVENTS

"High-performance blockchain infrastructure that scales and connects the financial Internet." "Meter is the fastest, most decentralized and scalable ethereum sidechain."

 

"Meter is a bridge that connects to Ethereum and some other chains." "Meter is fully compatible with Ethereum at the RPC level - bring over your Ethereum dApps with almost no changes! Unlike other Layer 2s and EVM chains, dApps built on Meter are fast, uncensorable and front running/MEV resistant."

 

"Moonriver houses several smart contracts on the Kusama network, built on Polkadot. In the same vein, Hundred Finance was developed using a code from Compound Finance."

 

"Building bridges is a dangerous business. Another attack sees $4.4M taken from Meter.io on BSC, making Hundred Finance lose $3.3M in collateral damage."

 

"According to developers, the hack took place on February 5." "Around 6am Pacific time we identified someone was able to leverage a vulnerability of the bridge to mint a large amount of BNB and WETH tokens and depleted the bridge reserve for BNB on WETH."

 

"Hackers stole BNB and wETH of about $4.4 million using the wrong trust assumption in the developing code." "[T]he issue [was] a bug introduced in the automatic wrap and wrap of native tokens like BNB and ETH extended by the Meter team." "The extended code had a wrong trust assumption which allowed hacker to call the underlying ERC20 deposit function to fake an BNB or ETH transfer."

 

"We have identified the issue: Passport has a feature to automatically wrap and unwrap gas tokens like ETH and BNB for user convenience. However, the contract did not block direct interaction of the wrapped ERC20 tokens for the native gas token and did not properly transfer and verify the correct number of WETH transferred from the callers' address. We are working on compensating funds to all affected users," the company explained.

 

"This means that the hackers sent an arbitrary amount of Ethereum to Meter, which was used to carry out the attack. After the attack, a series of events took place, affecting BNB’s price."

 

"After the attack, the hacker was said to have taken to Sushiswap to sell off all the BNB in his possession. After this, the price of BNB went down as far as 77% on Moonriver. Reacting to the price fall, most traders bought as much BNB as possible. After that, most of them took out loans in different tokens while using the BNB as collateral."

 

"The only impacted tokens were native gas tokens (WETH and BNB), and only Meter and Moonriver networks were impacted."

 

"We stopped all bridge transactions immediately and started an investigation." "Within 30 minutes we identified the issue to be a bug introduced in the automatic wrap and wrap of native tokens like BNB and ETH extended by the Meter team."

 

"We have identified some early traces of the hacker and are working with authorities. We urge the hacker to return the funds." "Meter has discovered bits of the hacker’s digital breadcrumbs and cooperates with law enforcement to identify the hacker." "The blockchain security firm PeckShield estimated that in total, 1,391 ETH and 2.74 wBTC were taken by the attacker and have since been sent to Ethereum where the tokens have gone through Tornado Cash, an ETH transactions privacy tool."

 

"We urge all the liquidity providers that provide liquidity involving WETH and BNB to remove liquidity from the pool and wait for an additional announcement from the Meter team. Please try avoid trading in these pairs as well."

 

"Community, we really appreciate everyone's patience and support as we work to get back up and running after this morning's exploit." "We are working on taking snapshots and designing a compensation plan to the WETH and BNB holders and LP providers."

 

"A number of opportunists then took advantage of the price dip by buying cheap BNB. They used the tokens as collateral on Hundred Finance to take out ETH, FRAX and MIM loans. Due to the discrepancy in BNB price, however, their loans were worth more than the collateral they had provided, causing a supply crisis."

 

"Accounts were able to purchase BNB.bsc at a reduced price and use these tokens as collateral at the global Chainlink price to borrow uncompromised assets on our platform. Of these, MIM and FRAX are currently impacted." "We would like to request that owners of the accounts that did so consider returning the assets borrowed so that other users are able to access their liquidity. 1 acc. holder has already done so and we are willing to pay further bounties to remaining 3 for doing the same."

 

"A representative from the Hundred Finance team told Cointelegraph that it would wait about a day before taking steps to reopen MIM and FRAX markets on the Moonriver side of itsplatform."

 

"The Meter team has committed to reimbursing its community and Hundred Finance for losses incurred due to the hack. The team stated on Sunday that it had set aside $4.4 million in MTRG tokens to cover initial losses." "In its recent statement, Meter mentioned that it would refund users MTRG tokens while setting aside about $4.4 million of the said token."

 

"We are working on taking a snapshot from before the attack & will convert the original BNB & WETH to 1:1 their values in MTRG, the rest inflated BNB & WETH will be converted based on the hacker stolen value from the LP pools."

 

“Meter have of course accepted responsibility for this hack and are intending to use their native token for reimbursement to the extent that they can, currently we are in the gathering addresses and amounts stage.”

Meter.io is a large multi-chain bridge, which allows assets to be moved between different blockchain smart contract networks. As part of their setup, funds exist locked in smart contract hot wallets, which back representative tokens used in the transfer. Based on an attacker exploiting a missing validation check, extra tokens were minted which were unbacked. The attacker stole $4.4m worth of ETH and BTC. It appears the ETH was successfully deposited to TornadoCash. The Meter.io protocol has agreed to reimburse affected users in full.

HOW COULD THIS HAVE BEEN PREVENTED?

In general, complex smart contract hot wallets shouldn't be in charge of minting. Instead, this should always be the responsibility of a simple multi-sig wallet with cold storage keys held by trusted individuals. If a hot wallet is needed for distribution, that should be audited by two competent firms and never exceed a value which the project can self-insure from other liquid assets.

 

Check Our Framework For Safe Secure Exchange Platforms

Sources And Further Reading

 For questions or enquiries, email info@quadrigainitiative.com.

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