On 21sth November 2021, Pickle finance was hacked where an attacker was able to drain $19M DAI from pDai jar. The attack exploited multiple inconsistencies & flaws in the logic of the pickle jar smart contract.
- Pickle Jar contract had a function swapExactJarForJar() which was meant to be generalized to bring more flexibility to the protocol. However, the attack could have been prevented if the function checked for whitelisted ones.
- The attacker’s jars contains minimalist functions to functions as a jar and since the user controls Jars most of the checks can be easily bypassed.
The user created two Jar contracts
Steps involved in exploit
- The attacker deploys two new fake Jars.
a- First Jar
b. Second Jar
2. The attacker calls strategyCmpdDaiV2.getSuppliedUnleveraged() which returns the amount of DAI available i.e 19728769153362174946836922 ~ 19M.728 DAI
3. The attacker calls swapExactJarForJar first time, supplying fake Jar addresses created earlier which withdraws deleveraged invested DAI from compound back to pDAI Jar.
4. Attacker calls earn() function 3 three times on pDAI (Pickling Dai) minting cDAI to StrategyCmpdDaiV2 contract.
5. The attacker deploys another two fake Jars & a fake underlying.
a. Third Jar
b. Fourth Jar
c. Fake Underlying contract
6. Then the attacker calls swapExactJarForJar this time passes in third & fourth Jar with crafted data that makes a function call to curve proxy in the context of the controller-v4. Since the attacker has crafted the Jar to work with the contract it bypasses checks to the point where arbitrary code is executed in the context of the controller-v4 contract. Then withdraw() is called to withdraw 950,818,864 cDAI to controller-v4. The withdrawn cDAI are deposited to the fake Jar through deposit() and all cDAI are transferred to the attacker.
7. The attacker calls redeemUnderlying on compound to convert all cDAI to DAI & walks away with ~19M DAI.
Try it yourself!
We have put together a Github repository to re-produce the attack.
Here is the Github repo: https://github.com/abdulsamijay/Defi-Hack-Analysis-POC/tree/master/src/pickle-finance