SlowMist Flags Milady Strategy Vulnerability, Citing TokenWorks Exploit Precedent

Executive Summary

Blockchain security firm SlowMist has detected potential suspicious activity related to Milady Strategy, attributing the vulnerability to a mechanism similar to one previously exploited in TokenWorks' NFT strategies, prompting increased market vigilance.

The Event in Detail

SlowMist identified a potential security flaw within the Milady Strategy protocol, advising users to exercise caution. The firm explicitly linked the detected activity to a vulnerability type previously observed in TokenWorks' operations, where hackers exploited contracts to swap high-value NFTs with low-value alternatives. The Milady Strategy ($MLDSTR) token operates as an ERC-20 asset on Ethereum with a fixed supply of 1 billion tokens, designed to underpin the Milady NFT ecosystem. It features no transaction fees, with its liquidity fully locked on Uniswap V2 and ownership renounced, signifying a decentralized operational model. The token's contract address is 0xfb96e5da37163d6cbea9d5cd5196dd55b70994b7. While specific financial instruments related to the present vulnerability were not detailed, the underlying token structure is critical to understanding potential impact. The broader Milady ecosystem, despite past controversies surrounding its creator and alleged coded imagery, has demonstrated resilience, marked by the launch of its CULT token which achieved a peak market capitalization near $500 million.

Market Implications

The identified vulnerability in Milady Strategy carries significant implications for its users and the broader DeFi landscape. Users interacting with Milady Strategy or similar protocols face the risk of asset loss and potential price volatility for associated tokens, including $MLDSTR. Such security incidents can erode trust in affected protocols and may lead to more stringent security audits across the entire Web3 ecosystem. This situation serves as a stark reminder of the persistent security risks prevalent in decentralized finance. The overall Web3 sector recorded over $3.1 billion in losses during the first half of 2025, exceeding the total for all of 2024, highlighting an escalating threat landscape. Attack vectors have evolved from simple bugs to sophisticated multi-stage exploits targeting on-chain vulnerabilities combined with off-chain manipulation.

Expert Commentary

Blockchain security experts and industry reports consistently underscore the evolving nature of threats in Web3. Hacken's analysis indicates that operational security flaws, particularly access-control vulnerabilities, are the primary drivers of financial losses, accounting for approximately 59% of the total in 2025. Smart-contract vulnerabilities contributed around $263 million, or 8% of losses. Wallet compromises and phishing attacks have resulted in combined losses exceeding $2.1 billion in the same period, often facilitated by phishing-as-a-service kits. SlowMist co-founder Yu Xian previously highlighted the irony of a sophisticated attacker falling victim to "basic authorization traps" in the UXLINK exploit, underscoring that human and process-level weaknesses are increasingly targeted. CoinMarketCap has also issued public alerts warning users about the proliferation of fake token schemes and the critical need for due diligence and verification of token authenticity before engaging in transactions.

Broader Context

The Milady Strategy security alert is emblematic of the challenges facing the burgeoning Web3 space. The increasing complexity of the ecosystem, with the integration of Layer 2s, Layer 3s, restaking protocols, and AI agents, compounds security risks. This incident reinforces the need for rigorous security practices, both for developers and end-users. Access control, compromised signers, leaked private keys, and misconfigured multi-signature setups remain critical weak points. Protocols and users are advised to verify all interaction surfaces, implement explicit token allowlists, ensure permission-granularity checks at the wallet level, and utilize transaction previews on hardware wallets to prevent malicious approvals. The continuous stream of exploits, from the UXLINK breach to the Cetus hack, demonstrates that despite technological advancements, human vigilance and robust operational security remain paramount in safeguarding digital assets within the volatile cryptocurrency market.