Cellframe Network Flash Loan Attack Incident Analysis

On June 1, 2023, at 10:07:55 (UTC+8), Cellframe Network was attacked by hackers on a certain smart chain due to a token quantity calculation issue during the liquidity migration process. This attack resulted in hackers profiting approximately $76,112.

Reasons and Process of the Attack

The root cause of the attack lies in the calculation issues during the liquidity migration process. The hacker cleverly exploited the vulnerabilities in the token quantity calculations by manipulating the Flash Loans feature and the liquidity pool.

The attack process is as follows:

1. The hacker first obtains a large amount of BNB and New Cell tokens through Flash Loans.
2. Exchange all New Cell tokens for BNB, causing the amount of BNB in the pool to approach zero.
3. Exchange a large amount of BNB for Old Cell tokens.
4. Before the attack, the hacker added liquidity for Old Cell and BNB, acquiring Old lp.
5. Call the liquidity migration function, at this point there is almost no BNB in the new pool, and almost no Old Cell tokens in the old pool.
6. The migration process involves removing old liquidity and adding new liquidity according to the new pool ratio.
7. Due to the imbalance in the proportion of tokens in the pool, hackers can obtain a large amount of liquidity with a minimal amount of BNB and New Cell tokens.
8. Finally, the hacker removes the liquidity from the new pool and exchanges the acquired Old Cell tokens for BNB, completing the profit.

Security Recommendations

To prevent similar attacks, the project team should:

1. Consider the changes in the quantity of the two tokens in the old and new pools comprehensively.
2. Consider the current token price, rather than solely relying on the quantity of the two tokens in the trading pair for calculation.
3. Conduct a comprehensive security audit before the code goes live.

This incident once again emphasizes the importance of strict security measures and comprehensive code audits in DeFi projects, particularly when it involves complex liquidity operations.