Micro Grape Tadpole Vulnerability Malicious Slasher Drains Vaults

Hey guys! Let's dive into a critical security vulnerability that could seriously impact staked funds. This article breaks down the Micro Grape Tadpole vulnerability, specifically how a malicious slasher can exploit the slashVaultUnsafe() function to drain vaults beyond their intended limits. We'll go through the root cause, attack path, impact, and provide a Proof of Concept (PoC) along with mitigation strategies.

Summary

This high-severity vulnerability stems from an explicitly unsafe function in BaseSlashing.sol:65. The slashVaultUnsafe() function is intended for specific scenarios, but a malicious actor can leverage it to bypass normal slashing protections, leading to excessive fund loss for stakers. This vulnerability is a big deal because it allows a compromised or malicious slasher to inflict far more damage than intended by the system's design. We are diving into the details of this critical vulnerability. We need to ensure everyone understands the risks involved and how to prevent such exploits.

Root Cause

At the heart of this issue is the slashVaultUnsafe() function located in BaseSlashing.sol:65. The problem? This function delegates to logic that likely bypasses crucial validations present in the safe version of the slashing mechanism. You see, normal slashing operations have built-in checks and balances to prevent abuse and ensure that only a reasonable percentage of funds are slashed in any given incident. However, this "unsafe" version short-circuits these validations, opening the door for malicious activity. The intention behind having an unsafe function might have been for exceptional circumstances or advanced use cases, but without proper safeguards, it becomes a significant risk. It's like having a back door that bypasses all the security checks at the main entrance.

Internal Pre-conditions

To exploit this vulnerability, a few internal pre-conditions need to be met:

1. Attacker Needs Control: The attacker must either be the designated slasher or somehow compromise the slasher's address. This is crucial because the slashVaultUnsafe() function is likely restricted to being called only by the slasher. If the attacker doesn't have this access, they can't initiate the malicious slashing. Gaining control of the slasher address could involve social engineering, phishing, or exploiting other vulnerabilities in the system's access control mechanisms.
2. Target Vault Stake: The target vault must have staked funds. This is pretty obvious, but worth stating explicitly. If there are no funds in the vault, there's nothing to slash. The more funds in the vault, the greater the potential damage from this vulnerability.
3. Lack of Bounds Checking: The unsafe logic implementation must lack bounds checking or cumulative tracking. This is the key technical flaw. Without proper bounds checking, the slasher can specify an amount to slash that exceeds the vault's balance or surpasses reasonable slashing limits. Similarly, if there's no cumulative tracking, the slasher can make multiple calls to slashVaultUnsafe(), each slashing a significant portion of the vault's funds, effectively draining it over time. This lack of safeguards is what transforms a potentially useful function into a dangerous weapon.

External Pre-conditions

Good news here! There are no external pre-conditions required to exploit this vulnerability. This makes it even more concerning because the attacker doesn't need to rely on any external factors or specific conditions being met outside of the system. Once they control the slasher and have a target vault with staked funds, they can execute the attack.

Attack Path

The attack path is pretty straightforward, making it even scarier:

1. Malicious Slasher Calls slashVaultUnsafe(): The attacker, now acting as the slasher, calls the slashVaultUnsafe() function, targeting a vault with a significant stake. They've identified a vulnerable vault and are ready to execute the attack.
2. Bypassing Normal Limits: The unsafe function bypasses normal percentage limits. This is where the damage really starts. Instead of being constrained by reasonable slashing percentages (like 10-20% per incident), the attacker can specify much larger amounts.
3. Excessive Slashing: If no bounds exist, the slasher can potentially slash 200% or even more of the vault's balance. How can you slash more than 100%? Well, in this case, it means slashing an amount greater than the total funds in the vault, leading to catastrophic losses for stakers.
4. Multiple Slashes (Alternative): Even if a single slash can't exceed 100%, the slasher can make multiple calls to slashVaultUnsafe() if cumulative tracking is missing. This allows them to drain the vault over time through repeated slashing.
5. Vault Drained: The vault is drained beyond the intended slashing limits, causing excessive losses for stakers. This is the end result – stakers lose their funds due to the malicious actions of the slasher.

Impact

The impact of this vulnerability is severe. Stakers can suffer a complete loss of funds beyond the intended slashing parameters. A malicious slasher gains the ability to drain vaults entirely, instead of being limited to reasonable slashing percentages (e.g., 10-20% per incident). Imagine staking your funds in a vault, thinking they are relatively safe, only to have a malicious actor wipe them out completely. This erodes trust in the system and can have devastating financial consequences for users.

PoC

Here's a Proof of Concept (PoC) in Solidity to illustrate how this vulnerability can be exploited:

// SPDX-License-Identifier: MIT
pragma solidity ^0.8.0;

import "forge-std/Test.sol";
import "../src/BaseSlashing.sol";

contract ExploitSlashUnsafe is Test {
    BaseSlashing slashing;
    address vault = address(0x1234);
    address operator = address(0x5678);
    
    function setUp() public {
        slashing = new BaseSlashing();
        // Assume we control the slasher or have compromised it
        slashing.setSlasher(address(this));
        
        // Mock vault with 1000 ETH stake
        vm.deal(vault, 1000 ether);
    }
    
    function testExcessiveSlashing() public {
        uint256 initialBalance = vault.balance;
        
        // Attempt to slash 200% (2000 ETH from 1000 ETH vault)
        // Safe function would limit this, unsafe might not
        slashing.slashVaultUnsafe(
            uint48(block.timestamp),
            vault,
            operator,
            2000 ether, // 200% of vault balance
            ""
        );
        
        // Check if excessive slashing occurred
        assertTrue(vault.balance < initialBalance);
    }
    
    function testMultipleSlashes() public {
        uint256 initialBalance = vault.balance;
        
        // Try multiple 100% slashes
        for (uint i = 0; i < 3; i++) {
            slashing.slashVaultUnsafe(
                uint48(block.timestamp),
                vault,
                operator,
                1000 ether, // 100% each time
                ""
            );
        }
        
        // Without cumulative tracking, each slash might succeed
        assertTrue(vault.balance == 0);
    }
}

This PoC demonstrates two scenarios:

• testExcessiveSlashing(): Attempts to slash 200% of the vault's balance, showcasing the bypass of normal percentage limits.
• testMultipleSlashes(): Performs multiple 100% slashes, illustrating how the lack of cumulative tracking can lead to complete vault drainage.

Mitigation

Okay, so we've identified the problem. Now, how do we fix it? Here are the recommended mitigation strategies:

1. Remove the Unsafe Function: If the slashVaultUnsafe() function isn't absolutely necessary for production, the safest option is to remove it entirely. This eliminates the risk of it being exploited.
2. Implement Safety Checks: If the unsafe function is required, implement the same validations as the safe version. This means adding checks for amount limits, cumulative slashing, and other safeguards to prevent abuse. Here's an example of how to add safety checks to the slashVaultUnsafe() function:

function slashVaultUnsafe(
    uint48 timestamp,
    address vault,
    address operator,
    uint256 amount,
    bytes memory hints
) public virtual onlySlasher returns (bool success, bytes memory response) {
    // Add safety checks even in "unsafe" version
    require(amount <= getVaultBalance(vault), "Amount exceeds balance");
    require(amount <= getMaxSlashAmount(vault), "Exceeds max slash");
    require(getCumulativeSlashed(vault) + amount <= getVaultBalance(vault), "Would over-slash");
    
    // Track cumulative slashing
    updateCumulativeSlashed(vault, amount);
    
    return BaseSlashingLogic.slashVaultUnsafe(timestamp, vault, operator, amount, hints);
}

This mitigation ensures that even the