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Definition voting attackflash loan governance attackDAO takeover

Governance Attack

Acquiring enough voting power in a protocol to pass a proposal that hands its assets or its controls to the attacker.

Where a protocol's treasury and parameters are controlled by token-weighted voting, the cost of control is the cost of acquiring votes. An attacker can buy tokens, borrow them, or in the worst designs obtain them for the length of a single transaction through a flash loan, then propose and execute a change that transfers funds. Defenses focus on time and on snapshotting: taking voting balances from a block before the proposal existed, imposing a delay between passage and execution so the community can react, requiring a minimum quorum and proposal threshold, and giving a guardian the ability to veto or pause. The 2022 attack on Beanstalk is the standard example of a proposal passed and executed using voting power obtained within one transaction.

In practice

A timelock between a vote passing and the change taking effect gives users a window to withdraw funds before a malicious proposal executes.

The common misunderstanding

That an attacker must hold tokens for a long period to exert control, when snapshot and quorum rules can permit voting power that exists for only a few seconds.

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Related terms

Admin Key Risk The risk created when a small group holds keys able to change, pause, or drain a protocol that…
Centralization Risk The risk that a system described as decentralized actually depends on a small number of operators,…
Protocol Emergency Pause A built-in switch letting designated parties freeze some or all of a protocol's functions during an…
Smart Contract Risk The risk that the code running a blockchain application behaves differently from what users expect,…
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