Cryptocurrency is a digital or virtual currency that uses cryptography for security. It operates independently of a central bank and can be used for online purchases and peer-to-peer transactions. Since it is a decentralized environment, there is virtually no regulatory system. This means that anyone can exploit a loophole to commit fraud and scams.
These scams are causing the crypto world to lose more and more of its supporters. People are increasingly afraid to participate in a project at the risk of having all their money stolen, as was the case with many projects like MtGox or QuadrigaCX. Note that not all projects that have failed in crypto are scams or frauds planned by the administrators.
There are some projects like RING Financial that were basically good projects but suffered hacks that made them lose credibility with their noders. In this article, we will mainly talk about RING Financial. We chose this project, this DeFi, because we were able to gather enough evidence to understand what really happened.
You are going to find out about RING Financial DeFi, how it worked, and especially how it was falsely accused of scam. In order for you to better understand what this is all about, we will start by looking at the general aspects of the project.
What were the missions of RING Financial?
To better understand the RING Financial project, let’s quickly go back to their fundamental missions.
DeFi RING Financial had the ambition to be a centralized platform where you can connect and perform all your crypto operations. As you know, it is quite difficult to find your way in the DeFi market, especially if you are a beginner and have no previous experience. And most of the time, many beginners get scammed by choosing the wrong projects. Indeed, with RING Financial, all crypto enthusiasts would be able to enjoy the many benefits of virtual currencies while avoiding scams and frauds. Buying tokens in DeFi thus becomes even easier and accessible to everyone.
Another thing that RING Financial brought to the table, and which has led to its huge growth, is the reduction of transaction fees. Generally, these fees are very high and can be a hindrance if you have large transactions to make. Since RING Financial is built on Binance’s Smart Chain, DeFi was able to benefit from the best transaction rates compared to its competitors.
Finally, RING Financial also had a reward system for its users. Users are rewarded with the RING Financial Token. This is the token used for various transactions. It is this part of the smart contract that a hacker exploited to commit fraud. We will come back to this in more detail in the following article.
RING Financial has been a phenomenal success, even more so than the project administrators had anticipated. As you know, the more money a project attracts, the more it attracts the eyes of hackers who start looking for opportunities or loopholes to commit scams or frauds.
What happened on December 5th, 2021, with RING Financial?
Although RING Financial was a well-structured project that would benefit everyone, it still needed enough experience to manage such a project since the crypto world is still very early and scams and frauds are common currency. The developers of the RING Financial project lacked this experience. It won’t be long before you find out why we think the DeFi developers lacked a little more experience.
In fact, December 5, 2021, is the day when RING Financial suffered a hack that forced the administrators to pause the project for a while. This may sound strange, but it all happened in less than 5 minutes. We got this information from the data recorded by the blockchain scanner.
What is the flaw the hacker uses to commit scam?
This is a flaw in the RING Financial smart contract. The smart contract is nothing more than a smart system on which the entire operation of RING Financial is written. It is the most used and secure technology on which projects are built in cryptos. The smart contract is known to be quite secure and quite powerful.
The RING Financial smart contract was subdivided into several parts. There is a part for the RING Financial Token and another part that is for the different rewards that RING Financial offers to its users. The RING Financial part of the contract had a function that only allowed administrators to change important parameters. This means that not just anyone can modify or change the way the project works.
The mistake that the developers made is that they did not have the reflex to assign the same function “onlyOwner” to the “Reward” part of the project. This will mean that anyone can modify this part of the code and take advantage of it to make scams or frauds. And that’s what the scammer did on December 5, 2021, by taking advantage of this security flaw to grant himself numerous RING Financial rewards.
You might be thinking that the developers themselves may have left this loophole open on purpose so that they could use it later. If this is the case, then this is not a hack but a scam. We have carried out further investigations which have shown us that this is really a fraud.
How can we be sure that the developers did not leave the flaw intentionally?
We talked to several Solidity developers to understand how such an error could lead to losses at the Noders. Solidity is the language used to write smart contracts on Ethereum.
The developers at RING Financial thought that in this code language, codes inherited the functions assigned to their parents, as in many other programming languages. In fact, they only assigned the “onlyOwner” function, which only allowed administrators to make changes to the main part of the project: RING Financial Token. They thought that all other parts would inherit this function directly. This was not the case.
It was concluded that this was a lack of experience on the part of the project developers, as any experienced developer could have identified the flaw before the Smart Contract was released. After the hack, the developers also tried to fix their mistake by adding the function that protected the code now, but it was already too late. However, they also made some security adjustments that blocked the hacker. Therefore, the hacker was not able to withdraw everything he collected during the scam. All this allowed us to confirm that RING Financial was not a scam.