Kokomo Finance on Optimism Yield Farming Protocol: A Case of Rug Pull

03/27/2023 05:50 • Metaverse Matters • 95 views

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

In late March 2021, Kokomo Finance (KOKO) on Optimism Yield Farming Protocol made headlines for the wrong reasons. According to Beosin EagleEye Security Risk Monitoring, the project experienced a rug pull. In this article, we will explore what happened, what a rug pull is, and how they can be avoided.

What happened to Kokomo Finance (KOKO)?

The deployer of Kokomo Finance (KOKO) initially deployed a contract for ‘cBTC’ (0x1e02e6a5b549eead726ebcce64a54215196760e2). They then called the ‘_SetRewardSpeed’ function and suspended borrowing. Following this, the attacker changed the implementation of the contract for ‘cBTC’ to a malicious contract (0x05b2957591a4d1334b230f8c56fd62ddee17b52e) and called the ‘0x804edaad’ method of the cBTC contract.
As a result, the attacker transferred 7010 soWBTCs from one address to another (0x5c8db6eea11896065ec7dcfc67f458c54ccf7bff). Subsequently, the attacker swapped the same amount of soWBTCs for 141 WBTCs, and everything went unnoticed.
Eventually, the attacker succeeded in replacing the 7010 soWBTCs with 141 WBTCs. As a result, the value of the project plummeted, leaving investors high and dry.

What is a rug pull?

A rug pull is a type of scam in cryptocurrency where a person or a group of people involved in a project suddenly takes off with the investors’ funds, leaving them with zero assets. It is specifically common among decentralized finance (DeFi) projects that lack essential regulatory procedures in the cryptocurrency space.
A rug pull usually happens when a project creates a massive hype and investors pour their money before fully understanding the project’s technicalities.

Avoiding rug pull scams

One way to avoid rug pull scams is to conduct extensive research before investing in any cryptocurrency project. Investors should thoroughly investigate the project, its developers, their previous projects, and its products or services. They should also study the project’s whitepaper, roadmap, social media channels, and transparency in their communication.
Another way of avoiding such scams is by investing in reputable projects. Reputable projects are those that have been audited by a professional third-party auditing firm. Investors should also watch out for projects that promise unrealistic returns or those with anonymous developers.
In conclusion, a rug pull is an all too familiar story in the cryptocurrency world. Fortunately, there are steps investors can take to avoid falling prey to these scams. Investors must do their due diligence, invest in reputable projects, and watch out for unrealistic promises.
# FAQs
Q: What is cBTC?
A: cBTC stands for Compound Bitcoin a token on the Ethereum blockchain. It is an ERC-20 token that derives its value from Bitcoin.
Q: What is a white paper?
A: A white paper is a document released by companies, including cryptocurrency projects, to outline their goals, business plans, and technical procedures.
Q: How do I report a rug pull?
A: Investors who believe that they have fallen victim to a rug pull should report the incident to the appropriate authorities and seek legal recourse when necessary.

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