Illuvium - Do Not Buy sILV!  Contract hack

By Deraji | ILVFi | 5 Jan 2022


UPDATE FROM THE TEAM HERE: 17 January 2022

  • Token holders as of Snapshot 13940833 will receive "sILV V2"
  • Liquidity providers of the sILV/ETH pool as of 13940652 will receive their liquidity back as ETH and sILV V2.  Total funding 251.13 ETH and 3984.63 sILV.
  • Those who traded up to an hour after the rescue snapshot (13940833) will receive "sILV V2" personally from project founders as a goodwill gesture.
  • All of this will occur once the sILV V2 contract has been launched.
  • Timeline and mechanism of claiming the new tokens are still TBD.
  • The Uniswap sILV/ETH pool is still there!  Please don't interact with it! 

ORIGINAL ARTICLE:

Hopefully all of my readers have been following the official Illuvium Twitter and Discord announcements, but if not, please DO NOT BUY sILV right now.  Here’s a brief recap of what happened and what to potentially expect in the coming days.

TL:DR:  Do not interact with the Uniswap sILV/ETH pool at all!  If you currently have sILV, do not sell and a new token will be issued based on a snapshot of sILV holders earlier on January 4, 2022.

Yesterday, the Illuvium team announced that a vulnerability had been uncovered in the current staking contract (V1) where it was possible to mint additional sILV. 

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I have temporarily removed my other articles on the sILV token, so if you are not familiar, this token was intended essentially as a gift card for Illuvium; a benefit to staking with the protocol avoiding the one year vesting period when claiming ILV.  However, an unofficial liquidity pool was created (first on Sushi, then on Uniswap), and served as a means of returning liquidity to stakers who were willing to sell their sILV at a discount to receive ETH.  This created an opportunity for people to receive liquidity, while enabling others to purchase discounted sILV for future use in Illuvium, most prominently the upcoming land sale.  As any ERC20 token, it became a speculative asset.

However, it has now been discovered the individual(s) had used the vulnerability to mint additional sILV, though it is not yet known or shared how many, or to what extent these tokens were used to extract value from the sILV/ETH pools.

While the exploit was discovered yesterday, January 3, today the Illuvium eDAO took further action by shutting down the Uniswap sILV/ETH by minting a large number of sILV tokens and flooding the pool, driving the value of the current sILV to near zero, eliminating the opportunity for the vulnerability to be exploited by selling the tokens.  Prior to this action, a snapshot of rightful sILV holders was taken.  The official timestamp of this message from Aaron Warwick on Discord was 7:30 PM UTC January 4, 2022. 

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Unfortunately for those not following the official announcements, purchases were made after the snapshot and flood of tokens, and the price rebounded with extremely high volatility, and has gone back and forth for the past several hours.

The Solves

Currently, minting of sILV has been halted, and those staking are unable to claim new sILV.  The likely solution to restore sILV minting will come with the conversion to the much anticipated Staking V2.  Kieran Warwick indicated that there will be time for stakers to claim sILV prior to the land sale, which I presume to mean there will be a gap of time between the implementation of Staking V2 and the land sale.

The snapshot of sILV holders will be used to issue a completely new token to serve as sILV, and current sILV is worthless.

Now Worthless sILV Address: 0x398AeA1c9ceb7dE800284bb399A15e0Efe5A9EC2

It has been advised by the team and Discord officials to not interact with the Uniswap sILV/ETH pair at all at this point.  The snapshot was taken prior to 7:30 PM January 4, 2022, with the promise from the team to issue the new sILV to all rightful holders of the token prior to this snapshot.  If you purchased sILV from the exchange after this moment, it is highly likely that you will lose money holding a worthless token.  It is unclear what will happen to those that attempted to exploit (knowingly or unknowing) the price volatility today, trading as the token moved rapidly.  If you are reading this, I strongly encourage you to follow the guidance of the team and continue to hold if you already have the token.  Do not purchase the now worthless token on Uniswap.

Summary:

While incredibly unfortunate for the project, and particularly for those that bought sILV following the team’s attempt to stop the hackers from extracting value from the Uniswap pool, the team has been transparent and reacted quickly over the past few days.  Stay connected to the Illuvium Discord for any updates on this situation. 

Please be patient as the new sILV is issued and we await for the critical improvements of Staking V2.   

 

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Deraji
Deraji

Crypto curious thinker, amateur economist, geriatric millennial gamer passionate about Illuvium. Happy to share my economic and financial assessment of this unique blockchain NFT Play-to-Earn project. patreon.com/ilvfi


ILVFi
ILVFi

ILVFI focuses on the upcoming P2E game, Illuvium, the first proposed AAA-quality video game based on blockchain technology and NFT ownership. We'll focus on both the game play, as well as the in-game and ILV governance token economics.

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