Fantasm Finance hack — March 2022

Fantasm Finance, a fractional-algorithmic protocol on Fantom that minted the synthetic asset XFTM against a mix of native FTM and its own FSM token, was exploited on 9 March 2022 at around 14:00 UTC.

Minting XFTM was meant to require a minimum amount of FTM alongside FSM. In its post-mortem the team said the developer missed the condition checking for the minimum amount of input FTM, so XFTM could be minted against FSM alone. Halborn's independent review describes the same defect as an incorrect parameter comparison in the mint function's error checking, where the quantity tested was not the FTM actually contributed. The attacker minted XFTM backed only by FSM, sold the XFTM back to the protocol for FTM, used the proceeds to buy more FSM, and repeated the cycle until the FTM collateral was gone.

Fantasm's post-mortem puts the proceeds at 1,008.498875252390151 ETH, about $2.62 million. U.Today reported $2,622,097 and Halborn over $2.6 million, though both are consistent with rather than independent of the team's own accounting. The attacker had funded the starting wallet through Tornado Cash on BNB Chain, moved to Fantom for the attack, then bridged the proceeds to Ethereum via Celer Bridge and sent them back through Tornado Cash, which PeckShield flagged on 10 March. XFTM and FSM lost almost all their value.

Fantasm halted XFTM minting and FSM farm emissions, offered a 10 percent bounty for the return of the funds, and said it had recovered 935,415 FTM through its own white-hat action for distribution to XFTM holders, with a further 174,327.763 FTM of accumulated protocol fees going to FSM stakers and lockers. That FTM was rescued from the protocol's own contracts rather than recovered from the attacker, so it does not reduce the loss. The protocol relaunched on 23 March 2022.