Euler Hook Vulnerability: Direct Calls Consume Withdrawal Allowance

The Hidden Danger: Direct Calls and Withdrawal Allowances

In the world of decentralized finance, security is paramount. Recently, a subtle yet significant vulnerability was discovered within the Keyring Network's Euler integration, specifically concerning the HookTargetAccessControlKeyringSidePocket contract. This issue, while not an adversarial exploit, can lead to a self-inflicted denial-of-service (DoS) for users. The core of the problem lies in the fact that the withdraw and redeem functions, designed to be called exclusively by an EVault through the Euler hook, were found to be externally callable. This means that without proper restrictions, any user could potentially invoke these functions directly. The implication of this seemingly minor oversight is profound: a legitimate user, by making a direct call, could inadvertently consume their own withdrawal allowance. This happens because the functions authenticate the caller and track their withdrawn amounts. When called directly, these functions record the withdrawal against the user's allowance, even though no actual vault assets were moved. This state change then prevents legitimate future withdrawals initiated through the vault, effectively locking the user out of their funds until the issue is resolved.

Unpacking the Vulnerability: HookTargetAccessControlKeyringSidePocket

The HookTargetAccessControlKeyringSidePocket::withdraw and HookTargetAccessControlKeyringSidePocket::redeem functions are critical components of the Keyring Network's integration with Euler. Their intended purpose is to interact with the EVault system, enforcing specific access controls and adhering to pro-rata withdrawal limits. The mechanism relies on the EVault acting as an intermediary, ensuring that calls to these functions originate from a trusted source and are properly authenticated. However, the vulnerability arises because these entry points lacked a crucial safeguard: they did not restrict msg.sender to a GenericFactory proxy. In the absence of this restriction, the BaseHookTarget::_msgSender function, which is responsible for determining the caller, returns the raw msg.sender when the caller is not a factory proxy. This bypasses the intended security check. Consequently, a credentialed user, acting in good faith, could mistakenly call the hook directly. Upon successful authentication (_authenticateCallerAndAccount), their userWithdrawnAmounts would be incremented. The critical flaw here is that this increment occurs without any corresponding movement of vault assets. The function believes a withdrawal has taken place, consuming the user's allowance, but the vault remains untouched. This creates a discrepancy in the system's state, leading to the self-DoS scenario.

The User Experience Impact: A Self-Inflicted Woe

Imagine a user attempting to withdraw funds from the Euler vault. They initiate the process, expecting it to go smoothly. However, due to the vulnerability in HookTargetAccessControlKeyringSidePocket, their previous direct (and mistaken) call to the withdraw or redeem function has already reduced their available withdrawal allowance. When they attempt a legitimate withdrawal through the vault, the system, bound by the incorrect state, rejects the transaction. This is not the result of a malicious attack; it's a consequence of user misinteraction amplified by a lack of robust input validation. The user, without realizing it, has bricked their own withdrawal capability. This situation is particularly frustrating because it's a self-inflicted problem that stems from a misunderstanding of how the system is designed to be interacted with. The system's state has been altered in a way that penalizes legitimate actions. The fix, therefore, is not about defending against external attackers but about enhancing the system's resilience against accidental misuse by its intended users. The persistence of this state change is what makes it a denial-of-service issue. It requires a correction of the underlying state to restore normal functionality for the affected users.

The Solution: Enforcing EVault Proxy Calls

To mitigate this self-DoS vulnerability, the recommendation is straightforward yet essential: restrict the withdraw and redeem functions to be callable only by EVault proxies. This is achieved by implementing a stringent check to enforce that msg.sender is indeed an eVaultFactory proxy. By adding a condition like require(eVaultFactory.isProxy(msg.sender), "Only EVault proxies can call this function!") at the beginning of these functions, we ensure that only authorized EVault contracts can trigger these sensitive operations. This simple addition acts as a gatekeeper, preventing any external, unauthorized calls. When a call originates from a legitimate EVault proxy, the eVaultFactory.isProxy(msg.sender) check will pass, allowing the function to proceed as intended, with proper tracking of vault asset movements and withdrawal allowances. Conversely, if any other address, including a regular user, attempts to call these functions directly, the require statement will fail, immediately reverting the transaction. This prevents any erroneous state changes from occurring and safeguards the user's withdrawal allowance. This proactive measure fortifies the integration, ensuring that sensitive functions are only accessible through their designated channels, thereby preventing accidental misuse and maintaining the integrity of the withdrawal process.

Conclusion: Fortifying the Keyring Network

The vulnerability discovered in the Keyring Network's Euler integration highlights the critical importance of robust access control and input validation, even in scenarios that appear to be self-inflicted. While the issue of direct calls consuming withdrawal allowances wasn't an exploit designed by malicious actors, it served as a potent reminder of how easily user misinteraction, coupled with insufficient safeguards, can lead to denial-of-service conditions. By implementing the recommended fix – restricting the withdraw and redeem functions to be callable exclusively by EVault proxies – the Keyring Network can effectively prevent such scenarios. This ensures that withdrawal allowances are only affected when actual asset movements occur through the intended EVault mechanism. This strengthening of the system's integrity not only protects users from accidental self-DoS but also reinforces the overall security posture of the Keyring Network and its integration with Euler. For further insights into smart contract security and best practices, you can refer to resources like OpenZeppelin and ConsenSys Diligence.