Incident Overview
On August 24th, 2022, KaoyaSwap, a decentralized transaction protocol built on the Binance Smart Chain, was attacked due to a bug in the swapExactTokensForETHSupportingFeeOnTransferTokens function. The vulnerability allowed the attacker to steal approximately $118,000 worth of 37,294 BUSD and 271.2 wBNB.
The bug was found in the swapExactTokensForETHSupportingFeeOnTransferTokens function, which was used to swap Fee-On-Transfer-Tokens. These tokens charge a fee for every transfer() or transferFrom(), causing the receiver to get less than the sent amount. The function miscalculated the amount to be transferred to the user when the last pair appeared multiple times in the swap path, allowing the attacker to steal funds.
The Attack Process:
The attacker designed a swap path that included two self-constructed tokens, resulting in the tokenA and wBNB pair being included twice in the swap path. The attacker borrowed a flash loan of 1800 wBNB and added liquidity to newly constructed token pairs. After the swap and removing liquidity, the attacker profited around 271 wBNB and 37,295 BUSD.
After the Exploit:
KaoyaSwap has yet to release an official statement. BlockSec identified several addresses that profited from the attack.
Exploit tx:
https://bscscan.com/tx/0xc8db3b62…208d74
Involved addresses:
https://etherscan.io/address/0x8df3dd42…749ca1
https://etherscan.io/address/0x236b6150…c891e5
https://etherscan.io/address/0xb77e7ee8…208589
https://etherscan.io/address/0xe946bc15…36df09
https://etherscan.io/address/0x50fc7d75…0b4d28
Incident Report
Protocol Information
What the Attacker Needed to Succeed
Understanding the prerequisites for this type of attack helps auditors identify protocols that are most at risk and helps developers build better defenses.
What Auditors Should Check
If you're auditing a protocol with similar architecture to Kaoya Swap, these are the critical security checks that could have prevented this incident (August 2022).
- Verify all logic paths related to Flash Loan Attack are guarded by proper access controls and input validation - see the Flash Loans Attacks attack class for patterns
- Review privileged functions (owner, admin, governance) for potential abuse vectors - centralization risks should be documented and bounded with timelocks or multi-sigs
Master these auditing techniques with hands-on labs and real exploit scenarios in the Smart Contract Hacking course.
Free TrialRelated Attack Classes
The technique used in this hack maps to these vulnerability classes in our security curriculum:
Sources & References
Learn to Prevent the Next Kaoya Swap
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