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Certik PeckShield Hacken
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Last updated: Nov 23, 2022
Firebird Finance is a DeFi protocol that offers a wide range of financial services on six different networks, namely Polygon, BNB Smart Chain, KuCoin Community Chain, IoTex, Fantom Opera, and Avalanche. The protocol offers three main products, which are Swapping, Vaults, and Farms-as-a-Service. The platform previously known as Value DeFi has been rebranded to Firebird Finance in July 2021.
Value DeFi users can benefit from the following protocol’s products:
vSwap2 is an automated market maker that works just like any other DEX in DeFi. In addition to the swapping function, it allows users to become liquidity providers in exchange for LP tokens. Liquidity providers earn fees from assets swap based on their share in the liquidity pool. No withdrawal fees are charged.
SwapV2 uses the smart routing technique in order to ensure the best market prices. Smart routing is the process of automatically finding the best available price of an asset by comparing it across multiple exchanges.
In addition, users can customize slippage tolerance, transaction deadline and choose the liquidity resources (DEXes). Currently, 12 different exchanges are available to choose from.
OneSwap is an AMM specifically intended for swapping pegged assets or stablecoins with minimum slippage. The Firebird team claims that price slippage is 100 times lower on OneSwap compared to other decentralized exchanges. OneSwap is integrated into the routing algorithm of SwapV2, which also allows finding the lowest exchange rates and smallest slippage for stablecoins as well.
Firebird Finance Vault is the core component of the protocol. Vaults are yield aggregators that use auto-compounding to generate higher yields on deposits along with multiple strategies to maximize the rewards across various pools. Once a user deposits their assets into the pools available on Vaults, the smart contract will automatically search for the best strategies to maximize its yield. Every Vault auto-compounds every 30 minutes, but any user can also do it manually at any time in case of the assets withdrawal.
Boosted vaults offer extra incentives and are marked with a green tag ‘Boosted’. The additional reward comes in the form of HOPE (native) tokens in addition to the APY generated by the pool.
The performance fee which is paid out from vault profits is already calculated in the APY, meaning that it has no effect on users’ capital.
Farms-as-a-Service (FaaS) is a ready-to-use self-service platform for new projects allowing easy creation of own yield-farming pools and pairs with flexible ratios, customizable fees, and token contract minter approval for the liquidity pool (LP). This service allows token creators to kickstart the liquidity of their product with no upfront payment. Pool creators receive 30% of swap fees in HOPE tokens.
FaaS are claimed to be protected from rug pull as there are no backdoors implemented in its Smart Contracts by the Value DeFi team. Farms can be verified by both the team and the community. The project’s community is also empowered to analyze new pools and determine whether they are trustworthy. Liquidity providers for these projects automatically receive farming tokens after providing their liquidity to the Farming Pool. Users may choose to lock their LP tokens to Farms to earn additional rewards in HOPE tokens, which will be proportional to the staked LP tokens.
HOPE tokens can be locked in the Governance section of the protocol for a period between one week to four years. This option is only available on Polygon and BSC chains. In return, users will receive mHOPE tokens, which can then be used for voting (where 1 mHope is equal to 1 vote) and generating passive income from the protocol’s ecosystem profits. In case of early withdrawal, users receive 50% of their tokens back instantly and the other 50% are burned. The lower is the lock period - the fewer mHOPE tokens are generated.
Firebird finance fees system deploys a profit-share mechanism, where 30% of swap fees are converted into the protocol’s native token HOPE and automatically paid back to swappers, 40% converted to USDC and given to mHOPE stakers and 30% converted to HOPE and given back to pools creator.
60% of OneSwap swap fees will be converted to USDC to reward mHOPE stakers and 40% will be converted to HOPE to reward the pool's creator.
The fees in Vaults are variable and depend on the Vault. Usually, around 4.5%-5% of harvested rewards are converted to USDC and paid back to mHOPE stakers.
Firebird finance also has an incentive program for its users called the Referral system. After receiving the unique referral link, it can be shared with friends and whenever they connect their wallet using the referral link and farm on Firebird pools, 1% of their reward will be given to the link provider.
Before proceeding with the Firebird Finance app, it is first required to connect a wallet. Firebird finance wallet support includes Metamask, Wallet Connect, Coinbase Wallet, Ledger, Trezor, Binance Chain Wallet, and others.
For the token swap, it is necessary to navigate to the Swap section from the main page, then select the assets to be swapped from one to another in both fields, then enter the amount to be converted and click ‘Swap’.
To provide liquidity, the user needs to switch to ‘Pools’, select the pair from the list, click on the pool, enter the number of tokens to be deposited, and confirm the transaction.
For swapping stablecoins, it is necessary to navigate to the OneSwap section from the main page, select the assets to be swapped from one to another, then click the ‘Approve’ button and pay the swap fee. Users can also add liquidity to the pools by switching to the ‘Pool’ section.
In order to deposit assets to Vaults, users need to navigate to the corresponding section from the main page. This page will show the list of available pools with their APY, daily APR, and TVL. Once the pool is chosen, users need to click on it, then it is required to add liquidity to a Liquidity Pool (LP) by clicking the 'Add liquidity' button that will redirect to other platforms depending on the blockchain to obtain the LP tokens. After acquiring the corresponding LP token, it is needed to come back to the Vault page and choose the amount of LP tokens to be provided, and finally, click the ‘Start earning’ button to confirm the operation.
To create a pool in Farms-as-a-Service, it is necessary to navigate to the Farm section, select ‘Create a farm’ after setting all the parameters, and the farm is instantly available to users.
To provide liquidity to Farms, users need to navigate to the corresponding section, choose the pool from the list, click Add liquidity, add the desired number of tokens and confirm the operation. To stake the LP tokens in the pool, it is necessary to come back to the pool, select the number of LP tokens to be staked and click ‘Stake’.
To take part in the Referral program, users need to navigate to the Referral page from the main menu. After receiving the unique referral link, it can be shared with friends and whenever they connect their wallet using the referral link and farms on Firebird pools, 1% of their reward will be given to the link provider.
To stake HOPE tokens, it is necessary to navigate to the Governance tab from the main page. After selecting the number of HOPE tokens to be deposited, the desired lock period, and approving the transaction, the user will receive mHope tokens in proportion to the duration. On BSC the staking function can be found on the ‘Farm’ tab and has exactly the same process.
HOPE is the native token of the Firebird Finance Protocol on the Polygon chain with a total maximum supply of 500,000,000 HOPE. 71% of HOPE tokens were assigned for fair community distribution, 1% for referral scheme, 4% - for an airdrop for long-term holders of HOPE, 12% of HOPE emissions for a reserve fund for distribution to the community and marketing, and the remaining 12% - for the Firebird team and advisors.
HOPE-P is the native token of Firebird Finance on the BNB Smart Chain with a total maximum supply of 1,000,000,000 with a two-year emission period. 9.75% of HOPE-P emissions go to the Reserve Fund for distribution to the community, marketing, giveaways, etc., and 9.75% of HOPE-P emissions go to the team and advisors. HOPE-P holders get all fees from the Firebird Finance ecosystem on BSC.
mHOPE is the Protocol’s Governance and Profit-share token, that encourages long-term staking and active community involvement through voting while benefiting from the increased rewards, as mHOPE tokens receive the large portion of fees generated by the Protocol.
The protocol has been audited by three firms, with two additional audits by Haechi and Defiyield in progress.
The team behind Firebird Finance is anonymous.
Before the transformation to Firebird Finance, in its previous version Value DeFi suffered two exploits in November 2020 and in May 2021, which resulted in a dramatic decrease in its TVL.
In the November exploit, a hacker took out a flash loan in ETH from AAVE, then swapped them for stablecoins and deposited a part of these stablecoins into Value DeFi's multi-stablecoin vault, and then performed a series of swaps manipulating the price which resulted in nearly $6 million worth of loss. According to PeckShield analysis, the incident was due to a bug in the protocol that uses an AMM-based oracle.
As mitigation, the team planned to deploy all the new vaults only on audited V1 code, while the V2 was planned to be released only after an audit. The team also planned to launch V2 of the protocol with the second source of oracle price feeds for comparison and time-lock and anti-re-entrance mechanisms.
To mitigate the losses of users, a compensation fund was created and funded by a combination of the developers' funds, insurance funds, and a portion of fees generated by the protocol.
In May’s incident, one of the Protocol’s pools suffered an exploit that resulted in a loss of users' deposits. The hacker turned himself into the sole operator, took control of the pool, and drained the original stake token (vBWAP/BUSD LP). Then, the attacker removed all of the tokens and removed liquidity to receive over 7300 vBSWAP and 205k BUSD. According to the ValueDeFi team, the exploit was possible due to a missing line of code that allowed anyone to re-initialize the pool to set themselves up as the owner.
As a mitigating action, the team has deployed a 12-hour time lock for all critical functions. All the lost assets were compensated to users from the reserve fund.
Firebird Finance has recently partnered with Deuce Finance, Byte Masons, and Fantasm finance bringing more whitelisted tokens to the Firebird Swap service. It has also partnered with Polycat Finance and Jetfuel Finance to expand Vault choices on the platform.
In 2022, it is planned to deploy the protocol on Solana, present a Launchpad, and issue an NFT collection.
Aave will integrate Chainlink's Proof-of-Reserve, further increasing the platform’s security
Uniswap's governance proposal accepted