Bribe Attack

A flash loan-funded bribe attack resulted in the theft of $182 million. The attacker used the borrowed funds to acquire a supermajority of governance tokens in a single transaction, passed a malicious proposal to drain the protocol's treasury, and repaid the loan. This demonstrated the risk of on-chain governance with low voter participation and high capital concentration.

The veToken model (vote-escrowed), pioneered by Curve, is a direct response to bribe attacks. It requires users to lock tokens for long periods (e.g., 4 years) to gain voting power, making it capital-intensive for attackers to amass temporary influence. This increases the cost of attack and aligns voters with long-term protocol health, though it can lead to voter apathy and centralization among large, early lockers.

The most common target for bribe attacks is the mechanism that determines liquidity mining rewards. On platforms like Curve, gauge weight votes control how many emissions (new tokens) are directed to each liquidity pool. By bribing voters to concentrate rewards on a specific pool, a project can artificially boost its Total Value Locked (TVL) and token price, creating a feedback loop that benefits the briber and participating voters.

An attacker uses a bribe marketplace (e.g., a smart contract) to offer direct payments, often in a stablecoin or the protocol's native token, to governance token holders. Voters are paid to delegate their voting power or cast votes for a proposal that benefits the attacker, such as:

• Approving a malicious parameter change.
• Directing protocol treasury funds.
• Electing a compromised entity as a validator or guardian. The attack exploits the economic rationality of voters, separating financial gain from the long-term health of the protocol.

While both involve influencing votes with money, the distinction lies in intent and transparency.

• Legitimate Vote-Buying: Can occur transparently within a protocol's rules to fund public goods or rally support for a beneficial proposal. The incentives and goals are openly disclosed.
• Bribe Attack: Is characterized by malicious intent and often opaque coordination. The goal is to subvert the protocol for the attacker's gain at the expense of other stakeholders, potentially leading to theft or protocol capture.

The Beanstalk Farms exploit in April 2022 is a canonical example. An attacker:

1. Took out a flash loan to acquire a majority of governance tokens.
2. Proposed a malicious proposal to send the protocol's entire treasury to their address.
3. Used their borrowed voting power to pass the proposal instantly in the same transaction. This flash loan-enabled governance attack resulted in a loss of approximately $182 million, demonstrating how bribe attacks can be executed in a single block without needing to persuade other voters.

Protocols implement several defenses to reduce the risk and impact of bribe attacks:

• Time Locks & Delayed Execution: A mandatory waiting period between a vote passing and execution allows the community to react to malicious proposals.
• Quorum Requirements: Setting a high minimum threshold of total tokens that must vote makes attacks more expensive.
• Multisig Guardians/Emergency Powers: A trusted, decentralized committee can have the power to veto clearly malicious proposals.
• Conviction Voting: Systems where voting power increases the longer tokens are locked on a proposal discourage short-term, mercenary voting.

Understanding bribe attacks requires familiarity with adjacent governance security topics:

• Governance Capture: The end-state where a malicious entity gains permanent control over a protocol's decision-making.
• Flash Loan Attack: A financing method often used to execute bribe attacks by temporarily acquiring voting power.
• Sybil Attack: Creating many fake identities to gain disproportionate influence; often discussed alongside vote-buying.
• Decentralized Autonomous Organization (DAO): The governance structure most susceptible to these attacks.

This defense requires voters to commit their tokens to a vote for a fixed period before the voting period begins, preventing last-minute bribery. Key mechanisms include:

• Vote Escrow: Tokens are locked in a smart contract, making them illiquid and unresponsive to new bribes after commitment.
• Reduces Flash-Bribe Vulnerability: Attackers cannot sway votes after the commitment snapshot is taken, as voters cannot change their position.

This mechanism replaces direct voting with market-based decision-making. Instead of voting on proposals, stakeholders trade in prediction markets on the proposal's expected outcome.

• Incentive Alignment: Profit motives naturally aggregate information and reveal the most economically beneficial outcome.
• Bribe Resistance: Manipulating a liquid prediction market is typically more expensive and complex than bribing a simple majority of token holders.

A system where voting power accumulates over time as a voter continuously signals support for a proposal. This creates a cost for attackers:

• Hysteresis: It takes time to build conviction, making vote-buying inefficient for rapid attacks.
• Skin in the Game: Voters demonstrate sustained belief, as withdrawing support resets their accumulated voting power.

This model inverts the standard process: proposals pass by default after a review period unless a sufficient quorum vetoes them.

• Shifts Attack Surface: Attackers must bribe a large, dispersed group to stop a malicious proposal, which is often harder than bribing a small group to pass one.
• Lazy Consensus: Leverages the assumption that most proposals are benign, requiring action only against clear threats.

Mitigates bribe attacks by separating voting power from pure capital. Systems like Proof-of-Personhood (e.g., BrightID, Worldcoin) grant one vote per unique human.

• Sybil Resistance: Makes it prohibitively expensive to acquire enough identities to sway a vote, as bribes must target real individuals.
• Plurality: Complements token-weighted voting to ensure decisions aren't solely dictated by the wealthiest entities.

Introduces direct penalties for malicious voting behavior to deter collusion with bribers.

• Vote Slashing: A portion of a voter's staked tokens can be destroyed if they vote in a way that is later proven malicious or against the protocol's long-term health.
• Increased Cost of Attack: Attackers must compensate voters not just for their vote, but also for the risk of losing their staked assets.