From Rags to Riches: The Tale of KyberSwap’s Infinite Money Glitch

DeFi Expert Reveals 'Infinite Money Glitch' Used by KyberSwap Attacker to Drain Funds

KyberSwap attacker utilized an ‘infinite money glitch’ to deplete funds, according to a DeFi expert.

Buckle up, digital asset investors, because we’ve got a mind-boggling story for you. It’s got intrigue, it’s got complex maneuvers, and most importantly, it’s got a villain who went from zero to hero real quick. Picture this: an attacker who managed to drain a whopping $46 million from KyberSwap, all thanks to an “infinite money glitch.” Sounds like something out of a fantasy movie, right? Well, hold on to your crypto wallets, because this is real life.

Our hero in this story is none other than Doug Colkitt, the founder of Ambient exchange, who took to social media to unravel the mysteries of this exploit. According to him, the attacker used a unique implementation of KyberSwap’s concentrated liquidity feature to play a sneaky trick on the contract. They made it believe there was more liquidity than in the wildest dreams of a Wall Street tycoon.

Now, decentralized exchanges (DEXs) usually offer something called “concentrated liquidity.” It’s like a crypto version of a stock exchange market maker, where liquidity providers set their own prices for buying or selling crypto. Here’s where the plot thickens: the attacker found a flaw in KyberSwap’s implementation of concentrated liquidity and exploited it for all it was worth. But don’t worry, folks, this exploit is specific to KyberSwap, so your favorite DEXs are safe. Well, for now at least.

Let’s dive into the nitty-gritty of this technical heist. Imagine an ETH/wstETH pool on Ethereum, filled with Ether (ETH) and Lido Wrapped Staked Ether (wstETH). Our villain’s journey began with a borrowed 10,000 wstETH (worth a cool $23 million at the time) from a flash loan platform called Aave. With these tokens in hand, they took a leap of faith and dumped $6.7 million worth of wstETH into the pool. The result? The price collapsed faster than a house of cards in a hurricane, reaching an absurdly low 0.0000152 ETH per 1 wstETH. At this point, even the most ambitious liquidity provider would have thrown in the towel.

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Ah, but our villain was just getting started. They cleverly deposited 3.4 wstETH and offered to buy or sell within a price range. They made sure to withdraw 0.56 wstETH immediately after the deposit, as if trying to perfectly align the stars. After this slick move, they proceeded with two more swaps, pushing the price up and down like a yo-yo. These swaps should have been pointless, a game of trading with themselves. But alas, due to a quirk in the arithmetic calculation, the protocol failed to remove liquidity in one swap and, to make matters worse, added it back in the final swap. Talk about a loophole the size of a black hole!

With this stroke of luck, our villain managed to double count the liquidity and walked away with 3,911 wstETH, making off like a bandit. Sure, they had to dump 1,052 wstETH in the first swap, but hey, you gotta spend money to make money, right? In the end, they cashed in a jaw-dropping 2,859 wstETH, raking in a sweet $6.7 million. Not too shabby for a day’s work.

But don’t lose faith, dear readers! Our story doesn’t end here. The audacity of this exploit caught the attention of KyberSwap’s team, and they’re not taking it lying down. They’ve been in touch with the attacker, who surprisingly wants to negotiate and return some of the ill-gotten gains. Will justice prevail, or will our villain continue to bask in their newly acquired riches? Only time will tell.

In the meantime, fellow digital asset investors, stay vigilant. If this tale has taught us anything, it’s that the world of crypto can be full of surprises. But fear not, for as long as there are blockchain heroes like Doug Colkitt unraveling these exploits, we can rest a little easier.

So, keep those investments secure, and remember, in the wild world of blockchain, truth is often stranger than fiction. Incidents like these make us wonder if we’re watching a thrilling heist movie or simply witnessing the birth of a new kind of folklore. Either way, let’s buckle up and enjoy the ride because in the realm of decentralized finance, every day is an adventure.

Stay safe, stay curious, and never stop exploring the exciting world of digital assets. And remember, folks, if it sounds too good to be true, it probably involves an “infinite money glitch.” Until next time, happy investing!

Related: HTX Exchange loses $13.6M in hot wallet hack: Report

Note: The content above is for entertainment purposes only and does not constitute financial advice. Always do your own research before making any investment decisions.

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