Unlock Protocol Critical Vulnerability

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Unlock Protocol

The Unlock Protocol is a smart contract utility which allows services to create membership systems easily. Unlock Protocol patched a critical vulnerability that could allow anyone to burn tokens from arbitrary addresses. The vulnerability was not exploited, and no funds were lost.

This is a global/international case not involving a specific country.

About Unlock Protocol

"Create locks and place them anywhere you’d like to lock content. Users can purchase memberships as NFT keys that grant access to content, tickets and anything else you’d like to monetize."

"Unlock is an open source, Ethereum-based protocol designed to streamline membership benefits for online communities." "Unlock is meant to help creators find ways to monetize without relying on a middleman. It’s a protocol — and not a centralized platform that controls everything that happens on it."

"Unlock’s mission is about taking back subscription and access from the domain of middlemen — from a million tiny silos and a handful of gigantic ones — and transforming it into a fundamental business model for the web."

"The Unlock Protocol can be applied to publishing (paywalls), newsletters, software licenses or even the physical world, such as transportation systems. The web revolutionized all of these areas - Unlock will make them economically viable."

"[A] vulnerability was introduced in a UDT contract upgrade on August 2nd 2021 and discovered on October 14th around 1045AM ET."

"The UDT contract did not originally included a burn function. However, in order to support governance functions, we had to perform an upgrade to our contract on August 2nd 2021. Even though we only used OpenZeppelin's library for the UDT contract (and did not write any logic ourselves), the upgrade required some very specific work to support changes in the contract storage between the version we deployed in November 2020 and the ERC20 version used for governance. Specifically, we had to flatten the OpenZeppelin library in order to apply some patches to avoid storage slot conflicts."

"In a nutshell, the vulnerability allowed anyone to burn tokens from any other address. Even though this could not have resulted in funds being transferred, and we could have recovered any "burned" tokens through a contract upgrade, we believe it could have impacted the price and behavior of the protocol in ways that would have been hard to recover from."

"Fixing the vulnerability was trivial: we just rendered the burn function non operating by removing the internal call to _burn. In a subsequent deployment, we completely removed the burn function so that calling it will result in errors." "A patch was successfully deployed on the same day at about 1PM ET. The vulnerability was not exploited."

"We will add a new testing framework to test our changes as upgrades (on top of unit tests). We already leverage hardhat's amazing "local fork" feature and we will increase our use of this. We will additionally perform these tests as part of our CI cycle."

"We will perform an audit for the UDT contract. We have always considered, and this is still the case, that the funds at risk on the Unlock and PublicLock contracts (the core protocol) were in fact smaller than the cost of auditing (especially as the protocol still evolves quickly). However, this is not the case for the UDT contract. We have contacted a few firms and we will share results once we have them."

"Even though no funds were stolen, the signature issue we identified means that a lot of people who have claimed tokens for the airdrop did not actually delegate their votes. We have identified the list of all accounts that have been affected. We are pondering a way to cover the gas cost of them issuing a 2nd delegation and we'll have something to offer soon."

This is a global/international case not involving a specific country.

The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.

Include:

• Known history of when and how the service was started.
• What problems does the company or service claim to solve?
• What marketing materials were used by the firm or business?
• Audits performed, and excerpts that may have been included.
• Business registration documents shown (fake or legitimate).
• How were people recruited to participate?
• Public warnings and announcements prior to the event.

Don't Include:

• Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
• Anything that wasn't reasonably knowable at the time of the event.

There could be more than one section here. If the same platform is involved with multiple incidents, then it can be linked to a main article page.

The Reality

This sections is included if a case involved deception or information that was unknown at the time. Examples include:

• When the service was actually started (if different than the "official story").
• Who actually ran a service and their own personal history.
• How the service was structured behind the scenes. (For example, there was no "trading bot".)
• Details of what audits reported and how vulnerabilities were missed during auditing.

What Happened

The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.

Key Event Timeline - Unlock Protocol Critical Vulnerability

Date	Event	Description
October 14th, 2021	Main Event	Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here.

Technical Details

This section includes specific detailed technical analysis of any security breaches which happened. What specific software vulnerabilities contributed to the problem and how were they exploited?

Total Amount Lost

No funds were lost.

How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?

Immediate Reactions

How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?

Ultimate Outcome

What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?

Total Amount Recovered

There do not appear to have been any funds recovered in this case.

What funds were recovered? What funds were reimbursed for those affected users?

Ongoing Developments

What parts of this case are still remaining to be concluded?

Individual Prevention Policies

No specific policies for individual prevention have yet been identified in this case.

For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.

Platform Prevention Policies

Policies for platforms to take to prevent this situation have not yet been selected in this case.

For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.

Regulatory Prevention Policies

No specific regulatory policies have yet been identified in this case.

For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.