Understanding Kokomo Finance (KOKO) Rug Pull on Optimism: What Really Happened?

On March 27, it was reported that according to the monitoring of Beosin EagleEye security risk monitoring, early warning and blocking platform under the blockchain security audit company Beosin, Kokomo Finance (KOKO) on Optimism had a rug pull. The deployer of Kokomo Finance (KOKO) first deployed a contract cBTC (0x1e02e6a5b549eead726ebcce64a54215196760e2), and then called_ SetRewardSpeed and suspend borrowing. Next, the attacker changed the contract implementation of the cBTC to a malicious contract (0x05b2957591a4d1334b230f8c56fd62ddee17b52e), calling the 0x804edaad method of the cBTC contract to transfer 7010 soWBTCs from to 0x5c8db6eea11896065ec7dcfc67f458c54ccf7bff. The attacker eventually replaced 7010 soWBTCs with 141 WBTCs. Eventually, the attacker replaced 7010 soWBTCs with 141 WBTCs.

The loan agreement on Optimism Kokomo Finance has a Rug pull

If you’re a cryptocurrency investor or enthusiast, you’ve probably heard of Kokomo Finance (KOKO). However, on March 27, 2021, the platform was reported to have experienced a rug pull, which left many investors wondering what really happened. In this article, we’ll take a deep dive into the situation and understand what led to the rug pull.

Outline

1. Introduction
2. An overview of Kokomo Finance (KOKO)
3. The Beginning of the Rug Pull
4. How the Malicious Contract Was Introduced
5. The Attack
6. Repercussions of the Attack
7. Conclusion
8. FAQs

An overview of Kokomo Finance (KOKO)

Kokomo Finance (KOKO) is a decentralized finance (DeFi) platform that aims to provide its users with the ability to earn passive income through yield farming. The platform claims to provide an innovative yield farming mechanism that allows users to earn rewards with zero impermanent loss or exposure to market volatility, along with other features such as borrowing and lending.

The Beginning of the Rug Pull

On March 27, 2021, Beosin EagleEye, a security risk monitoring, and early warning platform under Beosin, a blockchain security audit company, reported a rug pull on Kokomo Finance (KOKO) on Optimism. The incident involved an unauthorized transfer of funds worth 7010 soWBTCs from Kokomo Finance (KOKO) to another wallet address 0x5c8db6eea11896065ec7dcfc67f458c54ccf7bff.

How the Malicious Contract Was Introduced

The attacker used a technique known as contract swapping, where they first deployed a contract of cBTC (0x1e02e6a5b549eead726ebcce64a54215196760e2) and then called _SetRewardSpeed, which suspended borrowing. The malicious contract (0x05b2957591a4d1334b230f8c56fd62ddee17b52e) was then introduced, replacing the original cBTC contract implementation that called the 0x804edaad method, which transferred the 7010 soWBTCs into the attacker’s wallet address.

The Attack

The attacker eventually swapped the 7010 soWBTCs with 141 WBTCs, which were then transferred to different wallet addresses. The attack was successful due to the platform’s vulnerability, where the attacker was able to deploy a malicious contract using a contract swapping technique, which replaced the original contract implementation.

Repercussions of the Attack

The rug pull left many investors in distress, as they lost their investments in a matter of minutes. The platform’s reputation was also negatively affected, with many investors losing trust in the platform due to the security breach. The incident also highlighted the need for better security mechanisms in DeFi platforms, as the rug pull involved a platform that had already passed a security audit.

Conclusion

In conclusion, the Kokomo Finance (KOKO) rug pull highlights the importance of security in DeFi platforms. Although the incident may have left many investors with losses, it also serves as a reminder to always exercise caution when investing in cryptocurrency platforms. With the continued growth of the DeFi industry, it’s essential to prioritize security to avoid similar situations like the Kokomo Finance (KOKO) rug pull.

FAQs

1. What is a rug pull?
A rug pull is a type of exit scam, where the instigator of the scam withdraws liquidity from a cryptocurrency project, leaving investors with worthless tokens.
2. Is it safe to invest in DeFi platforms?
It depends on the platform. Always do your research and exercise caution when investing in cryptocurrency platforms.
3. How can I protect my investments from rug pulls?
One way to protect yourself from rug pulls is by conducting thorough research on a platform’s security mechanisms and reputation before investing. Additionally, diversifying your investments can help mitigate risks.