Nick Chong · 8 hours ago · 3 min read
The Maker Foundation is introducing a new security proposal after a well-known software engineer revealed that a malicious actor with enough Maker (MKR) could steal all of the collateral in MakerDAO, taking with him over $340 million.
The art of the heist
In a recent Medium post, freelance developer Micah Zoltu revealed that anyone with approximately 80,000 MKR could wipe out all of the collateral in MakerDAO. This includes DAI and SAI, as well as all the assets in other integrated systems, such as Compound and Uniswap. The hacker could potentially walk out with over $340 million.
Zoltu disclosed that Multi-Collateral Dai (MCD) was supposed to launch with security features to prevent bad actors from disrupting the system. However, the Maker Foundation failed to implement more stringent safeguards.
The lack of protocols regarding emergency shutdowns and governance delays allows malicious actors to steal all of the collateral in MarkerDao. And, defenders would have 0 seconds to defend the system against the attack.
“An attacker could do the following: acquire 80,000 MKR through whatever means possible. Create an executive contract that is programmed to transfer all collateral from Maker to you. Immediately (in the same transaction) vote on the contract. Immediately (in the same transaction) activate the contract. [And,] ride off into the sunset with 340M USD worth of ETH,” explained Zoltu.
MakerDAO takes immediate actions
A few hours after Zoltu published the infamous article, MakerDAO released an official statement claiming that measures would be taken to fix this loophole.
The firm introduced the Governance Security Module (GSM) into the core protocol. GSM increases the governance delays from 0 to 24 hours. This allows MKR holders to have enough time to review executive contracts before they are deployed.
“The GSM is designed to give the MKR token holders a chance to review any changes that will go into the system and act accordingly if those changes are deemed to be malicious,” reads the announcement.
Despite the flaw that Zoltu found in MakerDAO’s protocol, it seems like the team acted quickly. Thus far, no attacks have been reported. The same can be seen in the price of Maker, which was not affected by the news.