All You Need To Know About Infinite Mint Attack

What is an Infinite Mint Attack?

An infinite mint attack is a type of cybersecurity issue when hackers manipulate the code of a smart contract in order to mint new tokens above the authorized limit. This hack attack is limited to decentralized finance products or DeFi protocols.

In this manner, the attackers are able to compromise the integrity and value of a crypto project or token by printing them in infinite numbers.

For example, hackers attacked the Paid network smart contract to take advantage of vulnerability. This resulted in minting and burning tokens in an unorganized manner leading to a loss of $108 million for investors and 85% decline in the market value of Paid.

Investors rushed to convert a massive supply of their Paid token holdings into ETH during the attack leading to the massive price crash. However, the network retained goodwill among investors by offering them reimbursements and disproved the rumors about a rug pull.

Hackers intend to make profits using these tactics and sell tokens in an illegal manner and interfere in the organized structure of a blockchain network.

How does Infinite Mint Attack Work?

Here are some steps that hackers may focus on in order to executive an infinite mint attack:

Locate Vulnerability

The first step that allows hackers to infiltrate into a blockchain network is searching for vulnerabilities in its code. These vulnerabilities serve as weak points that allow hackers to access or breach the smart contract of a decentralized protocol.

Once the hackers identify this weak point, they can devise a plan to take advantage and infiltrate without any authorization or verification.

Exploits

The next step is making an illegal transaction containing a virus or exploiting protocols that can mess up the network in favor of the attackers. The attackers may be able to break the smart contract and use the attacking program. In this manner, they are able to change parameters, execute damaging functions, and take advantage of probable connections between different code portions.

Unlimited Token Minting and Dumping

In the final stage, the attackers will direct the broken smart contract to mint an unsanctioned number of tokens. These directives are not in accordance with the plan of the original architect of the blockchain protocol and smart contract. However, as soon as the smart contract carries out the directive it can led to negative effects such as inflation, price decline, and massive losses for stakeholders.

In the same stage, attackers may also direct the protocol to start dumping a considerable portion of newly minted tokens. In this manner, the markets are flooded with the same token within a small time period. The attackers profit by exchanging these tokens in exchange for other cryptocurrencies. However, the investors who are unaware about this attack may suffer from considerable losses due to sudden sell-off and supply shock.

Impact of Infinite Mint Attack

Here are some of the probable inverse impacts that can take place as a result of infinite Mint Attack.

The sudden increase in the supply of a token resulting from this attack can lead to the price decline of the token in question.

Investors may start to panic when they receive alerts about a massive price decline taking place on trading platforms.

The integrity of a protocol may be damaged forever as a result of this attack and it can take a lot of time to recover from this incident. The affected party may have to undertake massive debts in order to reimburse their investors.

 The confidence of the investors can be shaken in the stability and strength of decentralized protocols.

The attack can generate massive profits for the attackers. These funds are likely to fund more unethical ventures and assist the hackers in launching bigger attacks on other protocols using the profits from illegal exploits.

Conclusion

Infinite Mint Attacks pose a massive threat to the stability and value of a decentralized protocol. However, they are also a reason that prompts DeFi investors to check and recheck their code in order to shield themselves against these types of threats. At the same time, it also inspires investors to gather knowledge about the protocol that has a solid technical audit history in order to manage risks of possible cybersecurity incidents.