Fantom-based protocol Fantasm suffers $2.6M exploit

Fantom-based DeFi protocol Fantasm Finance reported on March 09 that it has suffered an exploit worth $2.6 million after a hacker found a vulnerability in its pool contract.

Fantasm Finance is an algorithmic assets protocol that develops and disseminates synthetic assets in the Fantom ecosystem.

Dear Community, we have published a Post Mortem for the Fantasm Finance Exploit on 09 March 2022.

Please read the article below covering:
– What happened
– Forensic Analysis
– Repayment Plan and Proposed Steps
– Next Taskshttps://t.co/LNoJtoraO1$FSM $XFTM

— Fantasm Finance (@fantasm_finance) March 10, 2022

The protocol recently launched a ‘Fractional-Algorithmic Synthetic Token’ called XFTM which is pegged to the value of 1 FTM (Fantom’s native token) on Fantom Opera. The total supply of the token is backed partially by FTM and partially by the FSM token.

The hackers, which exploited the network’s FTM collateral reserve, were able to mint XFTM by inserting only FSM tokens without entering any FTM. By collecting XFTM and selling it to FTM, they were able to buy more FSM and repeat the process to mint more XFTM and

Per the reports, the cyber attackers started from 50 FTM and gradually increased their holdings to 2.8 million XFTM in total. After replacing the tokens with FTM, the hackers used Tornado Cash to swap FTM with ETH. At the time of the hack, the stolen funds roughly amounted to 1,007 ether (ETH), worth over $2.6 million at press time.

In a post mortem report, Fantasm Finance released a compensation plan which will be launched today. The developers will distribute the accumulated FTM fee to FSM stakers and lockers.

In addition, when the Fantasm team noticed the breach, they white-hacked the protocol to get 935,415 FTM, which were airdropped back to XFTM holders based on a snapshot of block height 32970600. Fantasm will now look to relaunch the protocol and perform steps to refund the users.

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