Pawnfi Protocol Suffers Major Security Breach, Resulting In Loss Of APE Tokens

Key Points:

• Pawnfi Protocol experienced a security breach due to an attacker exploiting the contract and bypassing NFT verification.
• The attacker was able to borrow APE tokens using an NFT that was already staked in the APE Staking Pool, causing the contract to mistakenly recognize newly staked funds as being deposited by the attacker.

Pawnfi Protocol faces security breach as attacker exploits contract, bypassing NFT verification, causing loss of APE tokens. Detected and reported by BlockSec.

Pawnfi Protocol, a DeFi product that introduces the pawn concept, recently faced a security breach. The attacker was able to exploit the contract by borrowing APE tokens using an NFT that was already staked in the APE Staking Pool. The borrowed APE tokens were then transferred and held within the project contract.

Subsequently, the attacker reinvoked the depositAndBorrowApeAndStake() function, causing the contract to stake the APE tokens in the APE Staking Pool. At this point, the contract mistakenly recognized the newly staked funds as being deposited by the attacker, giving them access to withdraw the APE tokens.

This attack was due to the protocol’s failure to verify whether the NFT had actually been transferred when users used a specified NFT as collateral for borrowing. The security breach was detected and reported by BlockSec, a blockchain security firm.

Pawnfi Protocol provides fair appraisal, liquidity, and use cases for Non-Standard Assets (NSA). In addition to supporting mainstream assets, Pawnfi covers a wide range of Non-Standard Assets, including NFTs, LP tokens, tokenized rights, and minor cryptocurrencies with relatively less liquidity.

Pawnfi’s concept of using pawns as collateral provides a unique approach to lending and leasing markets. The platform’s appraisal process is designed to ensure that borrowers receive a fair value for their assets, while lenders are protected from potential losses. Pawnfi’s liquidity provision ensures that both borrowers and lenders have access to the assets and funds they need, while the use cases for NSAs offer a range of opportunities for asset owners.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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