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This post will be the first in what is potentially a series, deconstructing and explaining what went wrong at the technical level while providing a timeline tracing the actions of the attacker back through the blockchain.

This first post will focus on how exactly the attacker stole all the money in the DAO. This exploit in the DAO is clearly not trivial; the exact programming pattern that made the DAO vulnerable was not only known, but fixed by the DAO creators themselves in an earlier intended update to the framework's code. Ironically, as they were writing their blog posts and claiming victory, the hacker was preparing and deploying an exploit that targeted the same function they had just fixed to drain the DAO of all its funds.

Let's get into the overview of the attack. The attacker was analyzing DAO. The basic idea is this: When the DAO goes to withdraw your reward, call the function to execute a split before that withdrawal finishes. The function will start running without updating your balance , and the line we marked above as "the attacker wants to run more than once" will run more than once.

What does that do? Well, the source code is in TokenCreation. Basically the attacker is using this to transfer more tokens than they should be able to into their child DAO. The first thing the attacker needed to do to pave the way for his successful exploit was to have the withdraw function for the DAO, which was vulnerable to the critical recursive send exploit, actually run.

Let's look at what's required to make that happen in code from DAO. If the hacker could get the first if statement to evaluate to false, the statement marked vulnerable would run. When that statements runs, code that looks like this would be called:. Notice how the marked line is exactly the vulnerable code mentioned in the description of the exploit we linked!

Remember that because this is all happening from inside withdrawFor from inside splitDAO, the code updating the balances in splitDAO hasn't run. So the split will send more tokens to the child DAO, and then ask for the reward to be withdrawn again. Ethereum's gas mechanics don't save us here.

The first step towards all of the above is to simply propose a regular split, as we've mentioned. No matter, it's just a split proposal like any other! Nobody will look too closely at it, right? As was neatly explained in one of slock. If the hacker could get the first marked line to run, the second marked line will run the default function of his choosing that calls back to splitDAO as we described previously.

The balanceOf function is defined in Token. Luckily accumulatedInput is oh so simple to manipulate. Just use the default function of the reward account! Not only that, but because there is no logic to decrease accumulatedInput anywhere it tracks the input the account has gotten from all the transactions ever , all the attacker needs to do is send a few Wei to the reward account and our original condition will not only evaluate to false, but its constituent values will evaluate to the same thing every time it's called:.

Remember that because balanceOf refers to balances, which never gets updated, and because paidOut and totalSupply also never get updated since that code in splitDAO never actually executes, the attacker gets to claim their tiny share of the reward with no problems.

And because they can claim their share of the reward, they can run their default function and reenter back to splitDAO. If nothing has ever been paid out, this will always evaluate to false and never throw! The original line is equivalent, after subtracting paidOut from both sides, to:. To me this doesn't make much sense -- why waste the gas in this manner?

I think this is why many people assumed the attacker needed a balance in the reward account to proceed with the attack, something they in fact did not require.

The attack works the same way with an empty reward account as with a full one! Let's take a look at the DAO's reward address. The DAO accounting documentation from Slockit pegs this address as 0xd2e16a20dd7b1ae54fbdc7b0.

Check that account's transactions and you see a pattern: That's one transaction for each recursive call of withdrawRewardFor, which we described above. So in this case there actually was a balance in the rewards account, and the attacker gets to collect some dust. It's obvious to anyone constructing or analyzing this attack that certain properties of the DAO specifically that any split must be running the same code as the original DAO require an attacker to wait through the creation period of their child DAO 27 days before withdrawing any coins in a malicious split.

This gives the community time to respond to a theft, through either a soft fork freezing attacker funds or a hard fork rolling back the compromise entirely.

Any financially motivated attacker who had attempted their exploit on the testnet would have an incentive to ensure profits regardless of a potential rollback or fork by shorting the underlying token.

The staggering drop that resulted within minutes of the smart contract that triggered the malicious split provided an excellent profit opportunity, and while there is no proof the attacker took the profit opportunity, we can at least conclude that after all this effort they would have been stupid not to. Another contingency that the attacker needed to think of is the case that a DAO split occurs before the attacker can finish emptying the DAO.

In this case, with another user as sole curator, the attacker would have no access to DAO funds. Unfortunately the attacker is a smart guy: Because of a property of the DAO we'll discuss later in the post, these split DAOs are vulnerable to the same emptying attack we're describing here. All the attacker has to do is sit through the creation period, send some Ether to the reward account, and propose and execute a split by himself away from this new DAO.

If he can execute before the curator of this new DAO updates the code to remove the vulnerability, he manages to squash all attempts to get Ether out of the DAO that aren't his own. Notice by the timestamps here that the attacker did this right around the time he started the malicious split, almost as an afterthought. I see this more as an unnecessary middle finger to the DAO than a financially viable attack: Many have concluded, and I agree, that this hints at the attacker's motivations being a complete destruction of the DAO that goes beyond profit taking.

While none of us know the truth here, I do recommend applying your own judgment. So we've painstakingly described all the boring technical aspects of this attack. Let's get to the fun part, the action: The account that executed the transactions behind the split is 0xf35e2cc8ededf5b7cca77d.

The child DAO they sent funds to is 0xaac7edfecb7d The proposal was created and initiated by account 0xbb2a9c3baecaf5a5b5a you can see the call to createProposal in the blockchain history there.

Deconstructing the constructor arguments that created that child DAO leads us to a curator at 0xda4ad3e16edeaaabe Johannes Pfeffer on Medium has an excellent blockchain-based reconstruction of the transactions involved in the malicious Child DAO. I won't spend too much time on such blockchain analysis, since he's already done a great job.

I highly encourage anyone interested to start with that article. In the next article in the series, we'll look at the code from the malicious contract itself containing the exploit that actually launched the recursive attack. In the interest of expedience of release, we have not yet completed such an analysis. Savvy readers of the above may notice that, even after overwhelming the stack and executing many more malicious splits than was required, the hacker would have their balance zeroed out by the code at the end of splitDAO:.

So how did the attacker get around this? Thanks to the ability to transfer DAO tokens, he didn't really need to! All he had to do was call the DAO's helpful transfer function at the top of his stack, from his malicious function:. By transferring the tokens to a proxy account, the original account would be zeroed out correctly at the end of splitDAO notice how if A transfers all its money to B, A's account is already zeroed out by transfer before it can be zeroed out by splitDAO.

The attacker can then send the money back from the proxy account to the original account and start the whole process again. Even the update to totalSupply in splitDAO is missed, since p. The evidence of two malicious contracts calling into withdrawRewardFor on the blockchain suggests that the attacker's proxy account was also an attack-enabled contract that simply alternated as the attacker with the original contract.

This optimization saves the attacker one transaction per attack cycle, but otherwise appears unnecessary. Notice how paidOut is updated before the actual payout is made now. So how does this affect our exploit? Well, the second time getRewardFor is called, from inside the evil second call to splitDAO, this line:. Because the attacker paid for a lot of gas when sending his malicious split transaction, the recursive attack is allowed to continue with a vengeance. Realizing they needed a 1.

I think the susceptibility of 1. This is probably why this exploit was missed in review so many times by so many different people: In the case of Ethereum, even secure functions that involve sending funds could render your original function as vulnerable to reentrancy. Whether they're functions from the default Solidity libraries or functions that you wrote yourself with security in mind.

Special care is required in reviews of Ethereum code to make sure that any functions moving value occur after any state updates whatsoever, otherwise these state values will be necessarily vulnerable to reentrancy.

That subject is being beaten to death on every form of social media imaginable. Please note that if someone beats me to these objectives, I reserve the right to cap the length of the series at one. The information provided in this post is intended only to provide a broad overview and timeline of the attack, as well as a starting point for analysis. If you have blockchain data or analysis, or contract source code or binary analysis that may have been relevant to the topics described here, please share it by mailing me at phil linuxcom.

I will be happy to add it to the post with an acknowledgement in an effort to create a comprehensive reconstruction of the events of the last 24 hours as of this writing. Phil Daian is a first year Ph. Analysis of the DAO exploit ethereum dao June 18, at A Multi-Stage Attack This exploit in the DAO is clearly not trivial; the exact programming pattern that made the DAO vulnerable was not only known, but fixed by the DAO creators themselves in an earlier intended update to the framework's code.

Notice how this is done first! How does the DAO decide how many tokens to move? Using the balances array of course: When that statements runs, code that looks like this would be called: And so it goes: Propose a split and wait until the voting period expires.