Resources

People often ask me "How did you learn how to hack?" The answer: by reading. This page is a collection of the blog posts and other articles that I have accumulated over the years of my journey. Enjoy!

PalmSwap is a decentralized leveraged trading platform. The calculations for betting on the price going up or down must be done properly. There are two tokens at play: USD Palm (USDP) and Palm Liquidity Provider (PLP).

When removing liquidity, the price is calculated using the getAum() function. This multiplies the pool amount by the price of the token from an external oracle to get the amount of received tokens.

When calling buyUSDP(), there is a function to increase the price of USDP and increase the pool amount. Within the removal process, there is no decrease price though. The flaw is that the calculations are not 1 to 1 between adding and removing assets. The call gives a 1 to 1.9 ratio, which is way to easy to make money from.

How was this attack performed?

1. Flash loan for 3 Million USD.
2. Purchase a large amount of PLP with purchasePLP(); about 1 Million from the original amount. Under the hood, this will buy USDP and mint PLP with a 1 to 1 ratio. Finally, it stakes this for the user.
3. Purchase USDP directly by calling buyUSDP() with the rest of the funds. The problem is that the exchange rate has gone up between USDP and PLP, even though nothing has really changed.
4. Unstake the amount from step 2 ino rder to get USDP at the inflated rate.
5. Call sellUSDP() to sell all of the staked amount.

Another report can be found here from BlockSec as well. Overall, a bad functional bug led to a major exploit. It's weird that this was not caught in testing.