On 21sth November 2021, Pickle finance was hacked, where an attacker was able to drain $19M DAI from the pDai jar. The attack exploited multiple inconsistencies & flaws in the logic of the pickle jar smart contract.

Pre-requisite:

1. Pickle Jar contract had a function swapExactJarForJar() which was meant to be generalized to bring more flexibility to the protocol. However, the attack could have been prevented if the function checked for whitelisted ones. 
2. The attacker’s jars contain minimalist functions to function as a jar and since the user controls Jars most of the checks can be easily bypassed.

The Exploit

The user-created two Jar contracts

1. Attacker’s Address
2. Attack transaction
3. Attacker’s Contract
4. Detailed transaction trace

Steps involved in exploit:

1. The attacker deploys two new fake Jars.
   1. First Jar
   2. Second Jar
2. The attacker calls strategyCmpdDaiV2.getSuppliedUnleveraged() which returns the amount of DAI available i.e 19728769153362174946836922 ~ 19M.728 DAI.
3. The attacker calls swapExactJarForJar the first time, supplying fake Jar addresses created earlier which withdraws deleveraged invested DAI from the compound back to pDAI Jar. 
4. attacker calls earn() function 3 three times on pDAI (Pickling Dai) minting cDAI to StrategyCmpdDaiV2 contract.
5. The attacker deploys another two fake Jars & a fake underlying.
   1. Third Jar
   2. Fourth Jar
   3. Fake Underlying contract
6. Then the attacker calls swapExactJarForJar, this time passes in the third & fourth Jar with crafted data that makes a function call to curve proxy in the context of the controller-v4. Since the attacker has crafted the Jar to work with the contract it bypasses checks to the point where arbitrary code is executed in the context of the controller-v4 contract. Then withdraw() is called to withdraw 950,818,864 cDAI to controller-v4. The withdrawn cDAI are deposited to the fake Jar through deposit() and all cDAI is transferred to the attacker.
7. The attacker calls redeemUnderlying on the compound to convert all cDAI to DAI & walks away with ~19M DAI.

Try It Yourself!

We have put together a GitHub repository to reproduce the attack. Here is the Github repo.

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