(2020)

Pickle Finance

1000 BTC
image-right

Year

2020

Network

Ethereum

Country

Founder

Incident Name

Pickle Finance Hack

Effect

Funds Stolen: Approximately $19.76 million worth of DAI (stablecoin) was stolen. Data Breach: No user data breach was reported. Service Disruption: No major service disruptions were reported.

Outcome

Immediate Consequences: Loss of funds for Pickle Finance and a significant drop in the price of its governance token (PICKLE). Long-Term Consequences: Increased focus on security audits and best practices within the DeFi space.

Type

Smart Contract Exploit

Money Impact

At the Time: $19.76 million USD

Causes

Two main vulnerabilities in Pickle Finance's smart contracts were exploited: Input Validation Flaw: The "swapExactJarForJar" function failed to validate the legitimacy of Jars used for swapping, allowing attackers to create fake Jars and manipulate the system. Arbitrary Code Execution: A separate vulnerability enabled the attacker to execute unauthorized code within the contract, further facilitating the exploit.

Affected user/account

Recovery Efforts

Regulatory Response

Market Impact

At the Time: $19.76 million USD

Technological Details

Investigation Details

Insurance Coverage

Public Relations Response

Lesson Learned

The importance of thorough and ongoing security audits for DeFi protocols. The need for robust security measures and multi-layered protection within DeFi platforms. The value of transparency and clear communication during security incidents.

Ownership Transfer TX

Incident Review

On November 21, 2020, Pickle Finance, a prominent Decentralized Finance (DeFi) protocol on the Ethereum blockchain, fell victim to a security exploit. Pickle Finance offered users yield-generating opportunities through its "Pickle Jars," attracting significant investment at the time.

Background and Incident Details:

Pickle Finance relied on smart contracts to automate its functionalities. These contracts, while offering transparency, can also harbor vulnerabilities. Despite potentially undergoing audits, the Pickle Finance exploit exposed two critical issues:

Input Validation Flaw: The "swapExactJarForJar" function within the core contract failed to verify the legitimacy of Jars used for swapping assets. This allowed attackers to create fake Jars and manipulate the system.

Arbitrary Code Execution: A separate vulnerability enabled the attacker to execute unauthorized code within the contract, further facilitating the exploit.

Impact Analysis:

The hack resulted in the theft of approximately $19.76 million worth of DAI, a stablecoin pegged to the US dollar. This significant loss eroded user trust in Pickle Finance. The price of its governance token (PICKLE) plummeted by over 50%. The broader DeFi market also witnessed a decline in confidence due to this security breach.

Response and Resolution:

Pickle Finance promptly acknowledged the hack and advised users to withdraw their funds. The team worked on identifying the vulnerabilities and patching the smart contracts. They also emphasized the importance of security audits in the future. However, there weren't any reports of compensation for affected users.

Security and Compliance:

The incident exposed the limitations of smart contract audits and the need for robust security protocols within DeFi platforms. Regulatory frameworks for DeFi were still nascent at the time, and their influence on the outcome was minimal.

Broader Implications for the Cryptocurrency Community:

The Pickle Finance hack served as a wake-up call for the DeFi ecosystem. It highlighted the importance of thorough security audits, implementing multi-layered security measures, and fostering a culture of responsible development. The industry responded by prioritizing security best practices and advocating for self-regulation.

Conclusion:

The Pickle Finance hack underscored the inherent risks associated with DeFi platforms. It emphasized the need for continuous security improvements, user education, and potentially, regulatory frameworks to ensure a more secure and trustworthy DeFi landscape. By learning from such incidents, the cryptocurrency community can work towards building a more robust and reliable financial ecosystem.

Additional Insights:

Security experts have stressed the importance of ongoing code reviews and penetration testing for DeFi protocols. Law enforcement agencies are increasingly focusing on investigating and prosecuting cryptocurrency-related crimes. Industry analysts believe that the DeFi space will mature by prioritizing security and building user confidence.

Links

Decrypt: https://decrypt.co/48200/defi-protocol-pickle-finance-hacked-for-20-million - DeFi Protocol Pickle Finance Hacked For $20 Million

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