The Flash Loan Attack Analysis (FAA) Framework—A Case Study of the Warp Finance Exploitation

Werapun, Warodom; Karode, Tanakorn; Arpornthip, Tanwa; Suaboot, Jakapan; Sangiamkul, Esther; Boonrat, Pawita

doi:10.3390/informatics10010003

Cited by 3 publications

(3 citation statements)

References 24 publications

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“…DeFi relies on smart contracts and uses automated protocols to provide financial services without intermediaries. A flash loan is uncollateralised and unsecured loan in a DeFi system that allows borrowers to take loans without needing upfront collateral and then repay the loans with a single blockchain transaction, guaranteed by a smart contract [49]. DeFi poses security risks on the Ethereum blockchain due to smart contract weaknesses and new unsecure protocols such as MakerDAO.…”

Section: Decentralised Finance (Defi) Flash Loan Attackmentioning

confidence: 99%

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Blockchain Technology and Related Security Risks: Towards a Seven-Layer Perspective and Taxonomy

Mollajafari,

Bechkoum

2023

Sustainability

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Blockchain technology can be a useful tool to address issues related to sustainability. From its initial foundation based on cryptocurrency to the development of smart contracts, blockchain technology promises significant business benefits for various industry sectors, including the potential to offer more trustworthy modes of governance, reducing the risks for environmental and economic crises. Notwithstanding its known benefits, and despite having some protective measures and security features, this emerging technology still faces significant security challenges within its different abstract layers. This paper classifies the critical cybersecurity threats and vulnerabilities inherent in smart contracts based on an in-depth literature review and analysis. From the perspective of architectural layering, each layer of the blockchain has its own corresponding security issues. In order to have a detailed look at the source of security vulnerabilities within the blockchain, a seven-layer architecture is used, whereby the various components of each layer are set out, highlighting the related security risks and corresponding countermeasures. This is followed by a taxonomy that establishes the inter-relationships between the vulnerabilities and attacks in a smart contract. A specific emphasis is placed on the issues caused by centralisation within smart contracts, whereby a “one-owner” controls access, thus threatening the very decentralised nature that blockchain is based upon. This work offers two main contributions: firstly, a general taxonomy that compiles the different vulnerabilities, types of attacks, and related countermeasures within each of the seven layers of the blockchain; secondly, a specific focus on one layer of the blockchain namely, the contract layer. A model application is developed that depicts, in more detail, the security risks within the contract layer, while enlisting the best practices and tools to use to mitigate against these risks. The findings point to future research on developing countermeasures to alleviate the security risks and vulnerabilities inherent to one-owner control in smart contracts.

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Section: Decentralised Finance (Defi) Flash Loan Attackmentioning

confidence: 99%

“…Data leakage via phishing: attackers attempt to trick users and direct them to a fake website to access user's sensitive data, such as private key [49].…”

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confidence: 99%

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Blockchain Technology and Related Security Risks: Towards a Seven-Layer Perspective and Taxonomy

Mollajafari,

Bechkoum

2023

Sustainability

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DeFi Security: Turning The Weakest Link Into The Strongest Attraction

Kashyap

2023

SSRN Journal

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Providing Security for Flash Loan System Using Cryptocurrency Wallets Supported by XSalsa20 in a Blockchain Environment

Al-Zubaidie,

Jebbar

2024

Applied Sciences

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The days of long lines at banks and piles of paperwork are long gone. The lending landscape has been completely transformed by digital loans, which provide a quick, easy, and frequently paperless transactions. A payee can apply for a digital loan anytime, anywhere. The entire lending procedure is accessible and efficient, but the availability of data on the Internet provides many risks and threats, where there are certain difficulties in the world of digital lending and data security, and privacy are major concerns. It is important to address the possibility of predatory lending practices that target weaker payees, especially with flash loans, which are considered a critical type of digital loan, as they add additional pressure to banks in terms of security because they return to the same block of the blockchain, and the possibility of tampering with them is considered great. Therefore, we have developed a security protocol based on the principle of digital cryptocurrency wallets: these digital wallets are protected by our use of the Xsalsa20 algorithm. It has high specifications and is enhanced with the usage of the Crow search algorithm, which guarantees fast and efficient search results. After the analysis of the proposed system in the Tamarin Prover tool, we obtained proof of a lot of security properties like data authenticity, perfect forward secrecy, and many others, which constitute the matter that gives our system the power of security. Also, we obtained 0.6667 ms. as the rate of processing speed, 2990 ms. as the time required by the proposed system to repay loans after the conditions are met, and, finally, our proposed system has the power to present a flexible property by creating 29,700 loans every 3 s; by this, we obtained a system that is secure, authentic, fast, and flexible.

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The Flash Loan Attack Analysis (FAA) Framework—A Case Study of the Warp Finance Exploitation

Cited by 3 publications

References 24 publications

Blockchain Technology and Related Security Risks: Towards a Seven-Layer Perspective and Taxonomy

Blockchain Technology and Related Security Risks: Towards a Seven-Layer Perspective and Taxonomy

DeFi Security: Turning The Weakest Link Into The Strongest Attraction

Providing Security for Flash Loan System Using Cryptocurrency Wallets Supported by XSalsa20 in a Blockchain Environment

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