$15 000 000 USD

SEPTEMBER 2020

GLOBAL

EMINENCE

DESCRIPTION OF EVENTS

"Andre Cronje became a superstar of the DeFi scene after launching the yEarn yield optimizer. The corresponding token, YFI, surged from 0 to tens of thousands of dollars in a matter of weeks. Consequently, many profit-seeking users started to closely monitor Andre’s activity to jump into his new projects before others."

 

"On Sept. 28, Andrew Cronje, the head honcho at Yearn Finance, retweeted graphic designs for a new project called Eminence, so described by Cronje as a decentralized finance (DeFi) protocol for a “gaming multiverse.” The game is allegedly a spin-off of a 2016 kickstarter trading card game called Eminence: Xander’s Tales and may incorporate non-fungible tokens (NFTs)." "After Andre mentioned its unaudited beta smart contract in a tweet, users threw $15 million into it."

 

"Within hours of those contracts being deployed, they had already been exploited. The NFT focused Eminence platform had attracted around $15 million from FOMO fueled ‘degens’ (degenerate farmers) piling into the untested and unverified EMN protocol." "Since the contract was in the beta stage, it had a vulnerability, and hackers drained users’ funds by minting EMN tokens and selling them for more valuable assets on Sept. 28." "The reckless investors of the decentralized finance (DeFi) projects had to pay a massive toll as $15 million in digital currencies were siphoned by the hackers."

 

"For Eminence, users would deposit DAI into the smart contract and receive EMN in return. If the EMN is sent to the smart contract, it is burned and the user receives DAI in return."

 

"You could also exchange EMN for five other tokens (eAAVE, eLINK, eYFI, eSNX and eCRV, all Eminence wrapped versions of the popular tokens with the same tickers). Doing so would burn the deposited EMN. Inversely, if you deposit these tokens into their respective bonding curve contracts, it is burned and you receive newly minted EMN."

 

"To exploit these contracts, the attacker took out a flash loan for 15 million DAI from Uniswap and used this to buy EMN. He then traded and burned half this EMN for eAAVE, driving up EMN’s price. From here, he traded the rest of his EMN for DAI, traded his eAAVE to mint more EMN and then finally traded this EMN for DAI."

 

"When Cronje was woken a few hours later, he discovered that the contracts had been exploited for the full $15 million, and the hacker bizarrely sent $8 million back into his Yearn deployer account. Cronje stated that he would refund the $8 million following several threats" “As I am receiving a fair amount of threats, I have asked yearn treasury to assist with refunding the 8m the hacker sent… Funds will be returned to holders pre-hack snapshot.” "[N]ot even 72 hours after the exploit, affected users have had a portion of their losses returned." "[Andre] has also stated that he will continue to build the project and deploy test contracts, which are likely to contain vulnerabilities."

Eminence was an early beta NFT game which was launched by Andre Cronje. Users piled in to invest their funds in the unproven platform.

 

The platform was exploited by an attacker who stole the full $15m, returning $8m to investors. Those $8m were subsequently distributed back to investors.

HOW COULD THIS HAVE BEEN PREVENTED?

The Eminence project was an experimental smart contract hot wallet which had no audits nor pre-launch testing, and yet over $15m was invested. Having an audit would have most likely prevented the situation, as would limiting the level of funds in the hot wallet portion of the contract, with the majority of funds in an offline multi-sig wallet held by trusted and trained individuals.

 

Check Our Framework For Safe Secure Exchange Platforms

Exclusive: YFI’s Andre Cronje is tired, broke and close to quitting DeFi - Decrypt (Aug 6)
@AndreCronjeTech - Twitter (Sep 27)
@AndreCronjeTech - Twitter (Sep 27)
Hackers Stole $15 Million from Andre Cronje’s New DeFi Project (Sep 28)
Yearn Finance Foray into Gaming Multiverse Results in $15 Million Contract Hack (Sep 29)
Millions Lost: The Top 19 DeFi Cryptocurrency Hacks of 2020 | Crypto Briefing (May 21)
Unaudited Crypto Gaming Platform, Eminence, Hacked for $15 Million | Crypto Briefing (Jun 26)
@eminencefi Twitter (Jun 26)
DeFi Degens Hit by Eminence Exploit Recover Some Losses - CoinDesk (Jul 11)
CipherTrace Cryptocurrency Crime and Anti-Money Laundering Report 2020 (Jun 19)
SlowMist Hacked - SlowMist Zone (May 17)
@AndreCronjeTech Twitter (Jul 11)
Eminence, el juego basado en DeFi perdió $15 millones por un errorNoticieroBitcoin (Jul 11)
Yearn Finance (YFI) Deploys NFTs Venture Eminence, Gets Exploited Within Hours - CryptoTicker (Jul 11)
Eminence Finance Rug Pull, Speculators Lose $15M on EMN - DeFi Rate (Jul 11)
DeFi investors lose $15 million in Eminence flash loan exploit (Jul 11)
DeFi project Eminence lost $15 million of users funds. : defi (Jul 11)
YFI founder's incomplete DeFi protocol Eminence exploited, attacker drained $15M and then returned $8M (Jul 11)
Blockchain Hacks: 2020 | $15 billion lost, how can we mitigate hacks in 2021? | CertiK Foundation Blog (Jul 22)
Comprehensive List of DeFi Hacks & Exploits - CryptoSec (Jan 8)
Hackers Drain $15 Million From ‘Unreleased’ Yearn Finance Project - Decrypt (Jan 9)
https://mobile.twitter.com/Cointelegraph/status/1310791040601698306 (Jan 10)
@amanusk_ Twitter (Jun 26)

Sources And Further Reading

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

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