Friday, November 27

Blockchain Price Oracle Manipulation Produces Millions in Losses, Shows No Signs of Slowing

As indicated by the analyst from samczsun.com there’s been a considerable measure of price oracle control in 2020. On Monday, he tweeted: “Price oracle control has come about in over 30MM of misfortunes up until now and it gives no indications of easing back.” The tweet was likewise retweeted by the ethereum.org Twitter handle’s 500k devotees. The tweet from @samczsun additionally prompts a blog entry composed on the specialist’s web-based interface called: “So you need to utilize a price oracle.”

In the article, he clarifies that during the finish of 2019 he distributed a post called “Taking undercollateralized advances for entertainment only and for benefit” and the post clarified how he could assault ETH-based decentralized applications (dapps). The dapps he expounded on explicitly depend on price oracle information for various crypto resources.

“It’s presently late 2020 and sadly various tasks have since committed fundamentally the same as errors,” samczsun.com’s post stresses. “With the latest model being the Harvest Finance hack which brought about an aggregate loss of 33MM USD for convention clients.”

Essentially an oracle is a convention that can record both onchain and off-chain information and presents the information into a blockchain like Ethereum. These oracles are utilized in shrewd agreements, robotized market producers (AMM), exchanging stages, and one of the mainstream ETH-based oracles is Chainlink. The report on weaknesses says that engineers know about a portion of the issues fastened to oracles yet “price oracle control is unmistakably not something that is regularly thought of.”

The blog post however isn’t just criticisms and samczsun.com’s editorial features an introduction to oracles, oracle manipulation, and how to mitigate against exploitation. Further, the post discusses six vulnerabilities that have taken place in the past.

For example, the post mentions undercollateralized loans, the Synthetix sKRW oracle malfunction, the yVault bug, Synthetix MKR manipulation, the Harvest Finance hack, and the Bzx hack as well.

Report: Blockchain Price Oracle Manipulation Produces Millions in Losses, Shows No Signs of Slowing
An illustration of the Synthetix MKR manipulation. Photo via Samczsun.com.

Samczsun.com’s research also summarizes the Harvest Finance issues that took place on October 26, 2020.

“The attacker deflated the price of USDC in the Curve pool by performing a trade, entered the Harvest pool at the reduced price,” the findings state. “[The attacker] restored the price by reversing the earlier trade, and exited the Harvest pool at a higher price. This resulted in over 33MM USD of losses.”

The report concludes that “price oracles are a critical, but often overlooked, component of defi security.” The article highlights that there are plenty of ways that dapps can shoot themselves in the foot if they overlook some of these problems. “Reading price information during the middle of a transaction may be unsafe and could result in catastrophic financial damage,” the research post says.

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Credit: Bitcoin News

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