What is an infinite mint attack, and how does it work?

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Infinite Mint Attack: An Overview

An infinite mint attack is a type of exploit where an attacker manipulates the code of a smart contract to generate an unlimited number of tokens, exceeding the intended supply limits. This type of attack is particularly prevalent in decentralized finance (DeFi) protocols, and it undermines the value and integrity of the affected cryptocurrency by creating an excessive supply of tokens.

Case Study: The PAID Network Exploit

For example, the PAID Network experienced a significant hack where a vulnerability in its smart contract was exploited, allowing a hacker to mint and burn tokens at will. This led to a $180-million loss and an 85% drop in the value of PAID tokens. Before the attack was halted, over 2.5 million PAID tokens were converted to Ether (ETH). The network compensated users, dispelling rumors of an inside job.

Attack Methodology

Step 1: Identifying Vulnerabilities

The attack begins by identifying weaknesses in the smart contract, typically in areas related to input validation or access control. Once a vulnerability is found, the attacker crafts a transaction to exploit it, allowing the contract to mint tokens without proper authorization.

Step 2: Exploiting the Vulnerability

The attacker then triggers the vulnerability with a malicious transaction, which might involve modifying parameters, executing specific functions, or exploiting interactions between different parts of the code.

Step 3: Unlimited Minting and Token Dumping

The exploit enables the attacker to mint an excessive number of tokens, leading to inflation and a decrease in the token's value. The attacker can then flood the market with these newly minted tokens, exchanging them for more stable assets. This sudden increase in supply causes the token's value to plummet, harming investors and users.

Consequences of an Infinite Mint Attack

The immediate effect of an infinite mint attack is the rapid devaluation of the targeted token, causing significant financial losses and disrupting the ecosystem. Users and investors suffer as the token's value crashes, and the attacker may profit by selling the inflated tokens before the market reacts. This can lead to liquidity crises, making it difficult for investors to sell their assets at fair prices.

A notable example is the Cover Protocol attack in December 2020, where the value of the COVER token dropped from over $700 to less than $5 within hours. The attacker minted over 40 quintillion tokens, causing severe financial losses for token holders.


Comparison with Reentrancy Attacks

While infinite mint attacks focus on creating an unlimited supply of tokens, reentrancy attacks exploit the withdrawal mechanisms of a contract to repeatedly drain funds. Both types of attacks can have devastating effects, but they target different aspects of smart contract vulnerabilities. Understanding these differences is crucial for developing effective security measures.

Infinite mint attack vs. reentrancy attack

Infinite mint attackReentrancy attack
TargetToken minting mechanismSmart contract's withdrawal or transfer function
Exploitation methodBypassing token creation limitsRecursive calls during a transaction’s execution
OutcomeMassive inflation of token supply, value collapseUnauthorized draining of funds from the contract

Preventing Infinite Mint Attacks

To mitigate the risk of infinite mint attacks, cryptocurrency projects must prioritize security and implement comprehensive preventative measures. This includes:

  1. Regular Smart Contract Audits: Independent security experts should conduct thorough and frequent audits to identify and fix potential vulnerabilities.

  2. Strong Access Controls: Minting privileges should be restricted to authorized entities, and multisignature wallets should be used to enhance security.

  3. Real-Time Monitoring: Tools that detect unusual transaction patterns or sudden increases in token supply can help identify potential attacks quickly.

  4. Robust Response Plans: Having contingency plans in place to address attacks swiftly can minimize damage. This involves maintaining open communication channels with exchanges, wallet providers, and the community to coordinate effective responses.

By emphasizing security and adopting these strategies, cryptocurrency projects can reduce the likelihood of infinite mint attacks and protect the investments of their community members.

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