Uranium Finance. Lost $50m during migration to V2.1

By GoInvest | Discovercryptowithmike | 29 Apr 2021

Brief

Uranium Finance is a DeFi protocol based on the AMM system and distributes its profits among the holders of its native token.
Despite its transparency and innovative features, the protocol lost $50 million due to a bug during migration to V2.1.

This is not the first time we have heard of situations where very good projects, due to internal problems or rug pull, lose thousands, if not millions, of dollars. Today, we are talking about Uranium Finance, which on 28/04 declared that it had lost $50 million in various assets.

Uranium Finance: what is it?

I think it is appropriate to give you a general overview of Uranium Finance before moving on to the actual news, so that you understand that any project, regardless of its good intentions and intentions, always has a more or less high margin of risk.

Uranium Finance was born as a project aimed at solving the problem of most AMMs (Automated Market Makers). The basic problem, according to the team, lies in the fact that the value of the token collapses after a more or less long period of rises.

As a result, DEX usage is declining because user interest is waning exponentially, despite the fact that many development teams have tried numerous strategies to overcome this problem.

Uranium Finance

However, Uranium Finance, with its U235 protocol, seems to have overcome this obstacle by distributing part of its profits among users, thus promoting long-term investments. By staking U92s, in fact, all holders are entitled to a share of Uranium Finance's U235 dividends and are rewarded with BNBs and BUSDs.

To this end, rather than liquidity providers, users are treated as stakeholders. In addition, Uranium Finance distributes 75% of the economic return obtained from the platform (from deposit fees, swaps etc.) to all U235 holders.

These functions, together with the general transparency of the protocol, made it quite successful over time, bringing the LTV to over $600,000 in just one month. Too bad, though, that during the migration to V2.1 of the protocol, as much as $50 million was lost.

Uranium Finance loses $50.000.000

On Wednesday, for reasons yet to be discovered, the protocol faced a loss of $50,000,000 as a result of a migration to V2.1. Specifically, the following assets were lost:

80 BTC ($4.300.000)
1,800 ETH ($4.700.000)
7 million USDT ($5.700.000)
9 million BUSD ($17.900.00)
638,000 ADA ($800.000)
26,500 DOT ($800.000)
34,000 wrapped BNB ($18.000.000)
112,000 U92, native token of Uranium Finance ($160.608)

According to the Uranium Finance team, it could have been internal member exploitation or rug pull, implemented during the migration to V2.1. In addition, Igor Igamberdiev, a senior researcher at The Block, said it could be a bug in the pairs within the V2 contract.

Rug pull

Example of a rug pull (Trading View)

In these cases, i.e. when you have pairs within AMMs such as Weth-USDT, anyone can access the pair and take most of the tokens, sending them directly to their wallet using the functions of the protocol itself.

It was also illustrated how the perpetrator had already moved funds via tools such as Tornado Cash, which allows for totally anonymous withdrawals using zero-knowledge proof (ZKP) technologies.

Fortunately, the blockchain is a totally transparent and public world, where every transaction can be viewed if you have the right knowledge to do so. In fact, researchers at The Block were able to track all movements and conversions made after the theft on Uranium Finance.

Apparently, whoever made the breach by exploiting the bug moved 2,438 ETH via Tornado Cash, then converted the DOTs to ADA, and then to ETH via PancakeSwap. After that, the BSC version of ETH was converted to the Ethereum version via AnySwap, which is capable of performing cross-chain conversions (in this case from BSC to Ethereum).

The 80 Bitcoins were also converted via AnySwap, so that everything is on one blockchain. However, a person with little expertise or technical knowledge could never have done such an operation. This is why it is thought that the theft of $50,000,000 on Uranium Finance was carried out by an insider, or happened as a result of a rug pull.

The contract from GitHub was also removed, which is why further research is being carried out to understand the true nature of the episode. In any case, these situations make it clear that however secure and transparent a protocol may be, one must always be very careful.

Conclusion

It is not the first time that we hear about rug pulls, scams, or theft by internal staff. If this time it was the turn of Uranium Finance, we could see similar episodes with Meerkat Finance or WineSwap, also on Binance Smart Chain.

For this reason, the classic phrase "do not invest what you are not willing to lose" always applies. Those who have blocked all their capital on Uranium Finance, for example, have had big losses, which can create not only economic but also psychological problems.

Moreover, keeping up to date with the latest news can only help to minimize risks.

*This article will be published on theledger.it following our schedule in the Italian language. I'll post the link when we upload it :) Check the website if you want to support us :)

Sources

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Discovercryptowithmike

Hi there, Mike is an Italian boy who recently joined the crypto world and happened to actually love it! He wants to share with you his little but growing knowledge about cryptos. Plus, mike wants to show you guys some ways that he uses daily to generate cryptos with no investing! Mike is really glad to help people like him who wants to generate a little/big extra money at the end of the month! Also, he likes to receive suggestions from everyone of you and will be happy to share some ideas!