On April 21st 2023 an exploiter was able to abuse the UDT reward system from the Unlock contract.

Context

The Unlock contract distributes UDT governance tokens for transactions that purchase NFT memberships (check our docs for more details on the mechanism). In a nutshell, each PublicLock contract calls the recordKeyPurchase on the Unlock contract with a referrer address, as well as the value of the transaction. Then, the Unlock contract computes the amount of UDT tokens to be transferred to the referrer as a reward.

• This function recordKeyPurchase is critical and does include a mechanism to verify that its caller is indeed a PublicLock contract.
• On April 6th 2023, the Unlock Labs team deployed a new version of the Unlock contract on Ethereum mainnet at the following address: 0xe79B93f8E22676774F2A8dAd469175ebd00029FA.
• We deployed this new version as part of a protocol upgrade which led the UDT tokens to have a fixed supply (previously the supply of token was increasing on every purchase).
• In order to migrate locks deployed on the previous version of Unlock, we added a function called postLockUpgrade which lock contracts are calling when they are completing their upgrade.

What happened

A malicious actor was able to trick the Unlock contract to distribute UDT rewards held by it. The attack happened in 2 phases.

• First they called the Unlock contract’s postLockUpgrade in order to register themselves as a deployed lock: https://etherscan.io/tx/0x4ac413c3c6edd445d1f09cd770d6aafab19b0b58fde7d0cefc74e17265033ef6
  • This transaction leverages a custom contract deployed by the attacker. We will later call this contract the “fake lock.”
• Then, the attacker was able to repeatedly call recordKeyPurchase from their “fake lock contract” in order to transfer small amounts of UDT tokens out of the contract. They repeated that 17,760 times, through multiple transactions like these ones one:
  • https://etherscan.io/tx/0x8766fa36dc3660ce66924675027e94fb8062f23dde4c4ac241812bc1394964ee
  • https://etherscan.io/tx/0x2dd2adb4d2f39cc136bc601c70c0ee95b7b80dc6c918446b385445a61f340ef7

Each of these transaction calls recordKeyPurchase multiple times in order to accrue as much UDT as possible.

We estimate that a total of 21,147.32 UDT were transferred from the Unlock contract.

• Interestingly, given the developer reward in recordKeyPurchase, 20% of the stolen tokens were transmitted to an Unlock owned multisig (0x9168eabe624e9515f3836ba1716ec1ddd4c461d4) which now owns 4,229.46 UDT (exactly 20%).
• A total of 16,917.85 UDT (1.7% of the total supply) were stolen by the attacker.

These tokens were immediately swapped using Uniswap as part of the transactions on which they are rewarded.

Remedies

First, the team submitted an emergency upgrade to the Unlock contract that includes the following:

• Fixes the vulnerability that was exploited.

We have also: