A Detailed Guide to Understand an Infinite Mint Attack Mechanism

Infinite Mint Attack Description

The infinite mint attack involves a hack often occurring in decentralized finance (DeFi) protocols. It compromises a cryptocurrency or token’s value and integrity by developing an infinite quantity of them. 

For example, a hacker leveraged the susceptibility of the Paid network’s smart contract to burn and mint tokens, leading to a loss of $180M and an 85% reduction in PAID’s value. More than 2.5 PAID were changed into Ether before the attack ceased. 

The malevolent attacker may benefit from such attacks by selling the unlawfully generated tokens. Alternatively, the attacker can interfere with the regular operations of the affected blockchain network.  

Infinite Mint Attack Mechanism

First step: Detecting Susceptibility

The attack’s methodology involves spotting logical vulnerabilities in the contract, customarily associated with input validation or access control mechanisms. After finding the susceptibility, the attacker generates a transaction that leverages it, minting new tokens without the appropriate sanction or confirmation.

The susceptibility might permit circumventing the envisioned restrictions concerning the number of tokens that can be generated.

Second step: Exploiting

A malevolent transaction constructed by the attacker triggers the susceptibility. This may involve altering parameters, implementing specific functions, or leveraging unanticipated links between code segments.

Third step: Limitless Mining and Token Dumping

This exploit permits the attacker to offer extra tokens compared to the protocol’s architecture planned. Inflation may happen, thus lowering the value of the coin associated with the tokens.

Token dumping entails an attacker quickly flooding the market with recently generated tokens and swapping them for other cryptos or stablecoins. The original value of the token is significantly reduced by the unanticipated rise in supply, resulting in a price fall. 

Implication of Infinite Mint Attack

An infinite mint attack generates infinite cryptocurrencies or tokens, instantaneously devaluing the impacted asset and leading to significant losses for investors and users. The ecosystem’s integrity is compromised by weakening confidence in the affected network and decentralized applications linked to it.

Selling the inflated tokens before the market’s full reaction can benefit the attacker and perhaps leave others with valueless assets. Hence, investors might find it hard or impossible to sell their assets at a reasonable price in case the attack causes a liquidity calamity.

For example, the December 2020 Cover Protocol attack causes the token’s value to reduce from over $700 to less than $5 within a short time. Investors with COVER tokens experienced financial losses, while hackers minted over 40 quintillion coins.

The fall of the token value can interrupt the whole ecosystem. This includes exchanges, decentralized apps, and other services that depend on the token’s stability.

This attack can lead to legal problems and regulatory examination of the project, which may lead to fines and other penalties.

Infinite Mint Attack Comparison to Reentrancy Attack

Infinite mint attacks leverage flaws in the token generation process to create an infinite supply. This reduces the value and results in investor losses.

Re-entrancy focuses on the withdrawal process, allowing attackers to consistently drain funds from a contract before it can revise its balances. Despite the possibility of attacks having catastrophic outcomes, it is critical to comprehend the differences to establish efficient mitigation tactics. 

The main variations between an infinite attack and a re-entrancy attack are shown below.

Explanation on How to Prevent Infinite Mint Attack in Crypto

A multifaceted strategy that places security first at each stage of a crypto project is required to avert endless mint attacks. 

Having frequent and thorough smart contract audits carried out by independent security professionals is critical. The audits must carefully assess the code for faults that can be utilized to mint unlimited amounts of funds.

Robust access controls should be implemented. Mining powers must be granted to approved parties, while multisignature wallets must be utilized for added security. 

Projects must have robust backup plans to address potential attacks rapidly and reduce damage. This entails having open communication lines with exchanges, the community, and wallet providers.