pNetwork Hack - September 19, 2021
Overview
On September 19, 2021, an attacker took advantage of a vulnerability in pNetwork's code to steal 277 BTC worth over $13 million from the protocol. The exploit specifically targeted the pBTC-on-BSC bridge.
What Was Affected
• pBTC-on-BSC: the only bridge that was successfully attacked
• Other bridges (pBTC-on-ETH, pBTC-on-EOS) were NOT affected
Technical Root Cause
The pNetwork hack was made possible by a flaw in the code that processed event logs for the protocol. These event logs include peg-out requests that are processed by the protocol to unlock cryptocurrency on the Bitcoin blockchain.
The issue was improper validation of peg-out requests. The Rust code that extracted and processed these event logs did not validate that the requests originated from the legitimate pNetwork contracts. Fake requests generated by an attacker-controlled contract were therefore processed as legitimate, and the bridge erroneously unlocked tokens and transmitted them to the attacker.
Attack Vector / Steps
1. Attacker deployed a malicious contract on Binance Smart Chain that emitted event logs with the same shape as legitimate pNetwork peg-out request events
2. pNetwork's off-chain validators read these event logs without verifying that the emitting contract address matched the legitimate pNetwork pBTC contract
3. The off-chain bridge accepted the fake peg-out requests
4. Bridge software unlocked native BTC on the Bitcoin chain corresponding to the fake requests
5. Native BTC (~277 BTC, ~$13M) was sent to the attacker's Bitcoin address
Financial Impact
• 277 BTC stolen (~$13 million at the time of the hack)
• Funds moved to a single Bitcoin address controlled by the attacker
Response
• pNetwork offered the attacker a $1,500,000 bug bounty in exchange for the return of the stolen funds
• The attacker did not respond to the bounty offer
• The stolen funds remained on the attacker's BTC address and have not been moved since the hack
Remediation
The pNetwork team published a post-mortem and patched the validation logic in the Rust off-chain bridge code so that peg-out request event logs must originate from the legitimate pNetwork contract address before they are accepted.
Sources