$57 000 000 USD

NOVEMBER 2020

GLOBAL

SAFFRON FINANCE

DESCRIPTION OF EVENTS

"Saffron Finance launched November 1st, 2020." "Saffron Finance is a DeFi asset mortgage platform released by an anonymous team." "[L]iquidity providers have access to dynamic exposure by selecting customized risk and return profiles." The "protocol [enables] tokenizing on-chain assets, including contracts that otherwise impair access to utilized capital. Tokenized ownership of on-chain assets gives liquidity providers greater flexibility and uninterrupted access to their underlying collateral while enabling leveraged staking and bespoke risk management." "The token is SFI, allowing liquidity providers to select customized risk exposures to obtain returns. In each cycle, users can choose different risk-return combinations (A, AA, S) on Saffron to provide liquidity. A cycle of 14 days (LP locks within 14 days). After the cycle ends, users can remove liquidity and obtain Interest and prorated SFI."

 

"Saffron Finance issued an announcement stating that Epoch 1 redemption errors caused by contract loopholes resulted in 50 million DAI deposits deposited by Epoch 1 being locked for 8 weeks. The team is currently working on an emergency fix to solve this problem and will transition to Epoch 2."

 

"Please be aware that a bug has caused an error redeeming from epoch 1, for everyone who has liquidity waiting to be redeemed from epoch 1, we're working on a fix now. A statement will be released soon with more details. Thank you for your patience as we transition into epoch 2 Hot springs."

 

"[T]here was a function exposed to the public that could be called to create a new epoch on the contract. Saffron is close to becoming fully decentralized and having as many functions publicly accessible as possible is key to creating a decentralized autonomous system. That function had a bug such that writing specific inputs into it would lead to a contract state where no one could withdraw funds from epoch 1. At that point, everything was stuck in the contract, and would remain there until we were able to recover what we could."

 

"There were 3 affected contracts: The Saffron DAI pool (~15,000 SFI). The Saffron DAI/Compound Adapter (~$53,000,000 worth of cDAI). The Saffron SFI/ETH Uniswap LP Staking Pool (~$4,000,000 UniV2)."

 

"For full transparency, we will be making the Epoch1 FundRescue GitHub repo public, and offering a 10 SFI bounty for any bug or issue that could lead to unexpected loss of user funds." "The rescue should be done within 12 hours of the code being posted, assuming reviewers are able to adequately look it over in time, keeping in mind the code was reviewed in private as we worked through various solutions over the past 2 days." "Our epoch 1 recovery process has been made public and can be found on GitHub." "We were able to identify the issue quickly and resolve it within 3 days by creating a rescue contract and deploying it successfully to return almost all of the funds."

The Saffron Finance smart contract had a bug which caused a large quantity of fund to be "locked up" when wrong inputs were supplied. Advanced functions had to be used to recover funds.

HOW COULD THIS HAVE BEEN PREVENTED?

The security on smart contracts is comparable to hot wallets. In addition to funds being exploited, one has to consider the risk of funds being locked up.

 

In general, a properly set up offline multi-signature storage can be considered more secure.

 

Check Our Framework For Safe Secure Exchange Platforms

Sources And Further Reading

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

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