Gnosis Guild DAO Proposal Attack Analysis| QuillAudits

Summary:

On the 28th of September, 2022, There was an attack on the Gnosis Guild Reality Module (DAO Module). The main cause of the attack was malicious proposals that the attacker first proposed and then pushed for execution.

Gnosis Guild is a Society for interdependent software & keeper of the Zodiac open standard. Reality Module enables on-chain execution based on the outcome of events reported by Reality.eth oracle. To know more about the Protocol visit here.

Vulnerability Analysis & Impact:

Before starting with the Vulnerability Analysis, Let’s understand How does DAO work in the first place.

A DAO is a community-led entity with no central authority. The rules of the DAO are established by a core team of community members through the use of smart contracts. DAO members and individuals can draft a proposal for the future development of the protocol, and users with DAO’s native tokens can vote for proposals using the tokens.

To know more about DAO see here.

On-Chain Analysis:

Attacker Address: 0x84d3656163005ecdec0339b502068fc8e520feb1

Victim DAO Address: 0x8f9036732b9aa9b82d8f35e54b71faeb2f573e2f

  1. First, the attacker withdrew 0.1 ETH from aztecnetwork which is privacy-centric zkRollup.

2. Then the attacker pushed a malicious proposal named ‘dead’ at Snapshotlabs. The Reality Module of Gnosis Guild allows off-chain @SnapshotLabs voting to be settled optimistically on-chain.

3. For this, the attacker sent the hash of the snapshot voting and the hashes of the transactions that will be executed to RealityEth along with the bond (in ETH or other tokens) as a stake for the validity of the submitted data.

4. Data submitted as a proposal can be challenged by posting a higher bond or bringing the data to arbitration validation. If the data is never challenged, it is propagated for execution on the DAO’s behalf. For the first victim, the proposal challenge was set to 1 hour. As a result of which the proposal was executed and around 7.5 ETH were stolen from the victim’s safe.

This was how the first attack was successfully executed by the attacker. Similar to this one, the attacker used half of the funds to post a bond on another 6 DAOs. All of them have some time to react and mitigate the attack. Below are 6 victim DAO addresses that haven’t yet been exploited.

  1. 0xc05e9626310c6ca3369b6ef5fbd14dcaac4e7a70
  2. 0xa7456392eb978a756264d54968f55baf227fcbcf
  3. 0x4baef16ed74f40ce75c36ca458a88b42c06510ea
  4. 0xeddd59e44b2c79ca8fa361dd4d7b9fd6c169182c
  5. 0x0aae9c4aa2de971c4729cf53bfe82cc4256fef53
  6. 0x8215b53c8a1d54261d617e36a3751d9922f3c7b3

Status of Funds:

The attacker gained 7.5 Ether from the first victim but used half of the funds to post a bond on other DAOs and also he sent 2 ether back to aztecnetwork. The rest amount lies in the attacker's wallet.

[Update]
The hacker sent the remaining 1.2 Ether to aztecnetwork.

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QuillAudits Team

QuillAudits Team

Smart Contract Auditing Experts , Making web3 a safer place . audits@quillhash.com