economic-attack-vectors

Economic Attack Vectors

First Depositor Inflation Attack (ERC-4626)

The most common vault attack. The first depositor can manipulate the share price to steal from subsequent depositors.

Attack Steps

1. Attacker deposits 1 wei → receives 1 share
2. Attacker donates 1e18 tokens directly to vault (not via deposit)
3. Vault state: 1 share, (1 + 1e18) assets
4. Victim deposits 1.5e18 tokens
5. Shares minted = 1.5e18 * 1 / (1 + 1e18) = 0 shares (rounds to 0)
6. Attacker redeems 1 share → gets all 2.5e18 tokens
7. Victim loses ~1.5e18 tokens

Defense: Virtual Shares and Assets

contract SafeVault is ERC4626 {
    uint256 private constant VIRTUAL_SHARES = 1e3;   // 1000 virtual shares
    uint256 private constant VIRTUAL_ASSETS = 1;     // 1 virtual asset

    function totalAssets() public view override returns (uint256) {
        return IERC20(asset()).balanceOf(address(this)) + VIRTUAL_ASSETS;
    }

    function _decimalsOffset() internal pure override returns (uint8) {
        return 3; // adds 1e3 virtual shares
    }
}

Defense: Minimum Initial Deposit

uint256 public constant MIN_INITIAL_DEPOSIT = 1e6; // 1 USDC or equivalent

function deposit(uint256 assets, address receiver) public override returns (uint256 shares) {
    if (totalSupply() == 0 && assets < MIN_INITIAL_DEPOSIT) {
        revert InitialDepositTooSmall();
    }
    return super.deposit(assets, receiver);
}

Defense: Dead Shares

Lock a small amount of shares on first deposit to establish a non-manipulable base.

function _afterDeposit(uint256 assets, uint256 shares) internal override {
    if (totalSupply() == shares) {
        // First deposit — burn some shares to dead address
        uint256 deadShares = 1e3;
        _mint(address(0xdead), deadShares);
    }
}

Donation Attack

An attacker sends tokens directly to a contract (via transfer, not deposit) to manipulate internal accounting.

// VULNERABLE: relies on balanceOf for accounting
function getExchangeRate() public view returns (uint256) {
    return IERC20(asset).balanceOf(address(this)) / totalShares;
    // Attacker can inflate by donating tokens
}

// SAFE: track deposits explicitly
uint256 public totalManagedAssets;

function deposit(uint256 amount) external {
    totalManagedAssets += amount;
    IERC20(asset).safeTransferFrom(msg.sender, address(this), amount);
}

function getExchangeRate() public view returns (uint256) {
    return totalManagedAssets / totalShares; // not manipulable via donation
}