How much was lost in the New Free DAO hack?

The New Free DAO hack resulted in $1.3M in losses on September 08, 2022.

What attack technique was used in the New Free DAO exploit?

The New Free DAO exploit utilized Flash Loan Attack. Understanding this attack vector is critical for smart contract auditors and developers building secure DeFi protocols.

How can developers prevent similar smart contract attacks?

Preventing smart contract hacks requires a combination of secure coding practices, thorough security audits, and understanding common attack vectors like reentrancy, oracle manipulation, and access control flaws. Smart Contract Hacking (SCH) provides hands-on training to help developers and auditors identify and prevent vulnerabilities before deployment.

New Free DAO Hack

TOTAL LOST $1.3M

Medium Sep 08, 2022 Flash Loan Attack

Affected Chain 2022 Incident surface

Recovered - No recovery reported

All-Time Rank #791 By amount stolen

Protocol Type Exploit/Flash Loan Attack Target category

Incident Overview

Quick Summary

The New Free DAO project was subjected to a flash loan attack, suffering losses of $1.25M.

Details of the Exploit

New Free DAO is a DAO project that give participants the opportunity to coordinate activities and manage resources in accordance with a pre-agreed and formalized set of rules.

The attackers took 250 $WBNB via flash loan and swapped the loaned funds for $NFD tokens via the $WBNB -> $USDT -> $NFD path.

The attackers contract then created multiple contracts to claim airdrop rewards from the targeted victim contracts.

The attacker returned the flash loan and swapped all the $NFD for $WBNB. Then the malicious actor swapped 2k $BNB for $USDT.

Step by step the transaction occurred as follows:

- The scammer took a flash loan for $250 $BNB

- The $BNB tokens were then exchanged for the $NFD tokens

- The scammer contract had the ability to create malicious contracts that also created contracts and transferred them all tokens received from airdrop.

- In the end, the last contract exchanges the entire balance of $NFD tokens for $BNB, transfers them to the main contract, restores the flash loan, and then the main contract transfers the funds to the scammer.

All the stolen funds have been transferred through tornado.cash.

Block Data Reference

Attacker address: https://bscscan.com/address/0x22c9736d…9d6fd2

Attacker contract address: https://bscscan.com/address/0xa35ef9fa…948863

Flash Loan attack transactions:

1) https://bscscan.com/tx/0xb6f9b5ef…0003f8

2) https://bscscan.com/tx/0x8b77d75e…2f4ac0

Swap NFD to BNB transactions:

1) https://bscscan.com/tx/0x8c035fc9…410599

2) https://bscscan.com/tx/0xda4b4de6…f6c95b

Pair address: https://bscscan.com/address/0x26c06238…bdaeaf

This is classified as a Flash Loans Attacks . Compare similar hacks →

Incident Report

Protocol / Project New Free DAO

Date of Incident September 08, 2022

Attack Technique Flash Loan Attack

Classification Other

Primary Source View Post-Mortem

Protocol Information

Protocol Type Exploit/Flash Loan Attack

Affected Token NFD

Team Anonymous

Source Code Unverified

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.

Technical Knowledge Deep understanding of flash loan attack and Solidity and EVM internals

Capital Required Flash loan capital (borrowed atomically, zero upfront cost)

On-Chain Access Ability to interact with smart contracts and deploy a custom exploit contract

Protocol Analysis Identification of the exploitable vulnerability in New Free DAO's contract logic - root cause: other

Execution Speed Precise transaction ordering and timing to exploit the vulnerability within a single atomic block

Obfuscation Plan A strategy to launder and move stolen funds - typically through mixers, cross-chain bridges, or decentralized DEX swaps to resist tracing

What Auditors Should Check

Could this have been caught in audit? Yes — skilled auditors routinely flag Flash Loan Attack vulnerabilities in code review

If you're auditing a protocol with similar architecture to New Free DAO, these are the critical security checks that could have prevented this incident (September 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.

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Related Attack Classes

The technique used in this hack maps to these vulnerability classes in our security curriculum:

See all Flash Loans Attacks examples →

Flash Loans Attacks

Sources & References

01
Source 1 https://beincrypto.com/new-free-dao-crashes-99-reported-flash-lo…

Threat Assessment

Severity Level

MEDIUM

Attack Vector Flash Loan Attack
Root Cause Other
Year 2022

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