Authors: Lurpis, Yancy

### Summary

Context of Bifrost Treasury: $BNC Abnormal Movement Report [https://x.com/Bifrost/status/1809625752146424207](https://x.com/Bifrost/status/1809625752146424207)

Private key exploiter address on Moonbeam: [0xf682B6D40CA93BdD14B2CBd843BFa4e8d3916a29](https://moonbeam.subscan.io/account/0xf682B6D40CA93BdD14B2CBd843BFa4e8d3916a29)

Next actions of the private key exploiter:

2024/07/06 - The private key exploiter transferred 713,220.156 xcBNC to Moonbeam [[Tx](https://bifrost.subscan.io/extrinsic/5074241-3)]

2024/07/07 - The private key exploiter transferred 51,000 xcBNC back to Bifrost for disposal, and 662,220.138 xcBNC remained in the Moonbeam [[Tx 1](https://moonbeam.subscan.io/xcm_message/polkadot-3981d4fcd46249545b05c92c8b31bc2315fc8202)] [[Tx 2](https://moonbeam.subscan.io/xcm_message/polkadot-87dd9f060671e0bf93d4753850ba38604748ef61)]

2024/07/08 - The private key exploiter carried out a series of operations such as transfers, cross-chain transactions, and exchanges. 660,920.138 xcBNC remained in the Moonbeam in two address: 0xf682b6d40ca93bdd14b2cbd843bfa4e8d3916a29 and 0x6946b057b6d17388df81617fb196d6c1cc513cba [[Tx 1](https://moonbeam.subscan.io/extrinsic/0xe14e8a055ea03330b74c133396c92b3390c2c70ab668ce94aea2c119881d3ad6)][[Tx 2](https://moonbeam.subscan.io/extrinsic/0x84ab33fada0a41fa727af5d62359aed265fbbb8425b9d7929db403df6cbc9d48)][[Tx 3](https://moonbeam.subscan.io/extrinsic/0xfe7d28237cc506ade49501cd4e1eac551ee9d9e0da60d6e36390468aa2251180)][[Tx 4](https://moonbeam.subscan.io/extrinsic/0x39754e10f53d9545bc7992e8ff6c8d4a9b2031047d769dcd2e348f8ae5f12d1f)]

To prevent the private key exploiter from further sabotaging, the Bifrost side has currently suspended the cross-chain of xcBNC between Moonbeam <> Bifrost, and has governed by moving the BNC in the Moonbeam sovereign address into the Bifrost treasury for temporary storage, as the governance basis for the successful implementation of this proposal.

### Proposal

This plan will be divided into two proposals for execution: **Proposal 1**: Temporarily disable xcBNC transfers on the Moonbeam, and take a snapshot of the xcBNC balance of the private key exploiter address: 0xf682B6D40CA93BdD14B2CBd843BFa4e8d3916a29

**Proposal 2 (this proposal)**: Through governance, the xcBNC balance in the private key exploiter‘s snapshot address will be cross-chain transferred back to the Bifrost Treasury, and xcBNC transfers on the Moonbeam will be reopened.

### Test on Moonbeam(Chopsticks)

**preimage calldata:** `0x42031e020c1e0300016d6f646c617373746d6e67720000000000000000680e33d201862cc665120a351b20f7bd6ac07c1e0300016d6f646c617373746d6e67720000000000000000680733d201862cc665120a351b20f7bd6ac07cf682b6d40ca93bdd14b2cbd843bfa4e8d3916a2913faf2e6a50df57a081e0300016d6f646c617373746d6e67720000000000000000680733d201862cc665120a351b20f7bd6ac07c6946b057b6d17388df81617fb196d6c1cc513cba0f00a00d964f1ab1`

**preimage hash:**

`0x865bf6a4e86eb0d61bc0165276361a5bf92920853cad6fd3c0855e1512ec7aca`

**tx content:**

![image.png](https://bayasidian.oss-cn-shanghai.aliyuncs.com/20240708233404.png)


- Perform the operation with the asset administrator address(0x6D6f646c617373746d6E67720000000000000000).
    - Use the assets.thawAsset method to enable transfers for xc-BNC(id:165823357460190568952172802245839421906)
    - Burn `611070.138428879610` BNC in the address `0xf682B6D40CA93BdD14B2CBd843BFa4e8d3916a29` .
    - Burn `49850` BNC in the address `0x6946B057b6D17388df81617Fb196D6c1cC513CBA` .

**Execution result:**

![image.png](https://bayasidian.oss-cn-shanghai.aliyuncs.com/20240708233438.png)


assets.AssetThawed event indicates that xc-BNC assets are live.

assets.Burned event indicates that the exploiter's xc-BNC has been destroyed.

Test environment link:

[https://polkadot.js.org/apps/?rpc=wss://asset.tq-test.liebi.com/ws#/explorer/query/0xf841203926d33ee3419a2a3ca2c6709b5167b58a38ee8d591d32431cefe6254e](https://polkadot.js.org/apps/?rpc=wss://asset.tq-test.liebi.com/ws#/explorer/query/0xf841203926d33ee3419a2a3ca2c6709b5167b58a38ee8d591d32431cefe6254e)

**Verification of Results:**

![image.png](https://bayasidian.oss-cn-shanghai.aliyuncs.com/20240708233503.png)


![image.png](https://bayasidian.oss-cn-shanghai.aliyuncs.com/20240708233521.png)


The total circulation of xc-BNC has returned to normal.

Transfer of xc-BNC successfully executed.

Test environment link:

[https://polkadot.js.org/apps/?rpc=wss://asset.tq-test.liebi.com/ws#/explorer/query/0xaf7e75411ab80e09e1f253e645ee80f797cd23be0eabb14b313479dc153afc90](https://polkadot.js.org/apps/?rpc=wss://asset.tq-test.liebi.com/ws#/explorer/query/0xaf7e75411ab80e09e1f253e645ee80f797cd23be0eabb14b313479dc153afc90)

### **Protocol Description**

Bifrost ([https://bifrost.io](https://bifrost.io)) is a substrate based Kusama and Polkadot parachain that provides non custodial decentralised cross-chain liquid tokens for staked assets. By leveraging on Polkadots cross-consensus message format (XCM) it provides standardised cross-chain liquid staking services for various networks notably Polkadot ([vDOT](https://docs.bifrost.io/quick-start-and-tutorials/liquid-staking-slp/vdot-and-vksm)), Kusama ([vKSM](https://docs.bifrost.io/quick-start-and-tutorials/liquid-staking-slp/vdot-and-vksm)) and the first LST solutions on both Moonbeam ([vGLMR](https://bifrost.app/vstaking/vGLMR)), Moonriver ([vMOVR](https://bifrost.app/vstaking/vMOVR)) as well as other multiple chains.

Bifrost is currently one of the largest liquid staking protocols on Polkadot, with a total TVL of $88M. vDOT, Bifrost liquid LST for staked DOT, was launched in late May 2022, and around $53.5M TVL of DOT is already staked with Bifrost. vGLMR, the first parachain-liquid staking derivative in the Polkadot ecosystem, launched in late November 2022, and it has accumulated over 5M GLMR staked with Bifrost.

### **Links & References**

- Website : [https://bifrost.io](https://bifrost.io)
- Documentation : [https://docs.bifrost.io](https://docs.bifrost.io)
- Github Page : [GitHub](https://github.com/bifrost-finance)
- Communities : [Discord](https://discord.com/invite/8DRBw2h5X4); [Twitter](https://twitter.com/Bifrost)

See [`Pallet::dispatch_whitelisted_call_with_preimage`].

- **Problem Statement:** Addressing the private key exploiter's abnormal movements of xcBNC on Moonbeam and Bifrost, impacting the Bifrost Treasury.
- **Significance:** Preventing further sabotage by temporarily disabling xcBNC transfers on Moonbeam and transferring the exploiter's balance back to the Bifrost Treasury.
- **Proposed Solution:** Temporarily disable xcBNC transfers on Moonbeam, transfer exploiter's balance back to Bifrost Treasury, and reopen xcBNC transfers on Moonbeam.
- **Expected Outcomes:** Restoring normal circulation of xc-BNC, successfully executing transfers, and preventing further exploitation.

#63 Fix Bifrost Treasury BNC Reserve Proposal, Proposal 2: Burn exploiter’s xcBNC

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