Deus DAO - R3KT

It’s a hat trick for Deus DAO.

Token holders lost a total of ~$6.5M on Arbitrum, BSC and Etherum, and the DEI stablecoin depegged over 80%.

This incident, just over a year since their last appearance, makes Deus DAO the third protocol with three entries on our leaderboard.

Deus’ two previous entries were on the project’s original home, FTM, where they don’t appear to have been affected. Since then, DEI has branched out onto other chains.

After the alarm was raised, and the root cause identified, Deus eventually acknowledged the hack, as well as confirming a multisig address for whitehats to return funds.

But how many times can a thrice-hacked protocol be trusted?

Credit: _adamb, Zellic, 0xProtosec

A simple implementation error was introduced into the DEI token contract, in an upgrade last month. The burnFrom function was misconfigured, with the ‘_allowances’ parameters ‘msgSender’ and ‘account’ written into the contract in the wrong order.

This created a public (or pubic, according to Peckshield) burn vulnerability, which an attacker is then able to manipulate and gain control of DEI holders’ approvals and transfer assets directly to their own address.

The mis-ordered parameters allow the attacker to set a large token approval for any DEI holder’s address. Then, by burning 0 tokens from the address, the approval is updated to the attacker’s address, who can drain the holder’s funds.

See the following step-by-step:

identify an address with a huge amount of DEI

approve to this address

call burnFrom with amount = 0 and this address

During the burnFrom it grants approves all tokens from the address to your own

call transferFrom

Attacker’s address (Arbitrum): 0x189cf534de3097c08b6beaf6eb2b9179dab122d1

Example attack tx (Arbitrum): 0xb1141785…

Frontrunner address (BSC): 0x5a647e376d3835b8f941c143af3eb3ddf286c474

Example attack tx (BSC): 0xde2c8718…

Attacker’s address (Ethereum): 0x189cf534de3097c08b6beaf6eb2b9179dab122d1

Example attack tx (Ethereum): 0x6129dd42…

According to BlockSec’s MetaSleuth, the losses were approximately $5M on Arbitrum, $1.3M on BSC and $135k on Ethereum.

Luckily, the exploit on BSC was frontrun, and an on-chain message to the Deus Deployer shows the intent to return the funds. Other whitehats also sprang into action, and over $600k in USDC has so far been returned to a recovery multisig.

However, there were also doubts about the usefulness of giving funds back to a team that produced such a trivial bug.

Returning rescued funds to a thrice-hacked protocol seems rather counterproductive…

An official update mentions a recovery plan for users who lost out in the exploit, and Deus have reached out to the attacker on-chain.

But given the account was originally funded via Tornado Cash on BSC, it’s not looking good.

Will this be finally be a killing blow for Deus DAO?

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