What is Infinite Mint Attack, and how does it work?

Endless Mint Attack, explained.

An infinite minting attack occurs when an attacker continuously uses contract code to generate new tokens beyond the allowed supply limit.

This type of hacking is common in decentralized finance (DeFi) protocols. The attack creates an infinite amount of damage to the integrity and value of the encryption or token.

For example, a hacker used the paid network's smart contract vulnerability to burn mint, resulting in a loss of $180 million and an 85% drop in the value of PAID. More than 2.5 million paid tokens were converted to Ether (ETH) before the attack stopped. The network compensated users, dispelling rumors of insider dealings.

The malicious actor can profit from such attacks by selling the illegally created tokens or interfering with the normal operations of the affected blockchain network. The proliferation of infinite micro-attacks highlights how critical it is to conduct thorough code audits and incorporate security measures into modern contract development to protect against such exploits.

How does Infinite Mint Attack work?

In order to create a loophole that would allow an attacker to issue infinite tokens, the infinite mint attack targets vulnerabilities in smart contracts, particularly those related to token creation functions.

Step 1: Vulnerability identification

The attack method involves finding logical weaknesses in the contract, usually related to input authentication or access control mechanisms. Once the vulnerability is discovered, it creates a transaction that the attacker can use, which allows the contract to generate new tokens without the necessary authorization and authentication. This vulnerability allows bypassing the proposed limits on the number of tokens that can be created.

Step 2: Exploitation

The vulnerability is triggered by a malicious transaction that the attacker constructs. This may involve changing parameters, performing certain functions, or using unexpected connections between different pieces of code.

Step 3: Unlimited mining and token dumping

The exploit allows the attacker to issue more tokens than the protocol architecture intended. This token flood can cause inflation, which lowers the value of the coin associated with the tokens and causes losses to various stakeholders, including investors and users.

Token dumping is the act of an attacker flooding the market with rapidly generated tokens and then exchanging them for statcoins or other cryptocurrencies. This unexpected increase in supply caused the value of the original token to drop significantly, leading to a price crash. However, selling overvalued tokens before the market has the potential to benefit the attacker.

Endless consequences of mint attack

An endless mint attack will result in a rapid decline in the value of a token, financial losses and ecosystem disruption.

An infinite mint attack creates an infinite supply of tokens or cryptocurrencies, which immediately devalues ​​the affected asset and causes huge losses to users and investors. This undermines the trust in the affected blockchain network and the decentralized applications connected to it, thus undermining the integrity of the entire ecosystem.

Additionally, by selling overvalued tokens before the market fully reacts, an attacker can benefit and possibly hold other undervalued assets. As a result, if the attack causes a liquidity crisis, investors may find it difficult or impossible to sell their assets at a reasonable price.

For example, in the December 2020 Cover Protocol attack, the value of the token dropped from more than $700 to less than $5 in a few hours, and investors who held Cover tokens suffered financial losses. The hackers made off with more than 40 cents of coins.

A drop in the token's value could disrupt the entire ecosystem, including decentralized applications (DApps), exchanges, and other services that rely on the token's stability. The attack may lead to legal issues and regulatory oversight of the project, which may result in fines or other penalties.

A re-entry attack as opposed to an infinite mint attack

An infinite attack aims to generate an infinite number of tokens, while a re-entry attack uses withdrawal methods to continuously pump funds.

Infinite micro-attacks exploit flaws in the token creation process to generate an unlimited supply, lowering its value and costing investors losses.

In contrast, re-entry attacks focus on the withdrawal process, allowing attackers to continually withdraw money from a contract before it has a chance to update the balance.

Although any attack has dire consequences, it is important to understand the differences in order to develop effective mitigation strategies.

The key differences between an infinite mint attack and a reentrant attack are:

How to prevent an infinite attack in crypto

Cryptocurrency projects can greatly reduce their chances of becoming the target of endless minting attacks and protect community members' investments by emphasizing security and taking countermeasures.

Preventing endless micro-attacks requires a multi-pronged strategy that puts security first at every level of a cryptographic project. A thorough and frequent smart contract audit by independent security experts is critical. These audits carefully check the code for flaws that can be used to extract unlimited amounts of money.

Strong access controls should be in place; Issuing powers should only be given to authorized bodies; And multi-signature wallets should be used for added security. Real-time monitoring tools are necessary to quickly respond to potential attacks and identify any unusual transaction patterns or sudden supply of tokens.

Projects should have robust backup plans to quickly respond to potential attacks and minimize damage. This requires an open line of communication with exchanges, wallet providers and the community to anticipate problems and plan solutions.