Damn Vulnerable DeFi — Challenge #4 Side entrance (high-level)

Educational wargame challenge: a simple lending pool holds ETH, offers free flash loans, and also exposes open deposit / withdraw against an internal balances mapping. Lab goal: take the pool’s ETH.

Vulnerability class / root cause

• Flash-loan repayment is validated by contract ETH balance after the callback—not by a dedicated repayment accounting path.
• Separately, deposit() credits the caller in balances, and withdraw() pays out from that mapping.
• If flash-loaned ETH is “repaid” by calling deposit during the callback, the pool’s raw ETH balance looks restored while the attacker also gains a credited withdrawable balance—an accounting mismatch / confused deputy between balance checks and bookkeeping.

Impact (abstract)

Pool liquidity can be withdrawn by someone who never made a real economic deposit, emptying the lending pool.

Mitigations / lessons

• Track flash-loan debt explicitly; do not treat “ETH balance back to baseline” as proof of repayment if deposit can inflate the same balance.
• Separate flash-loan liquidity from user deposit accounting, or disallow deposit/withdraw during an open flash loan.
• Add invariants: sum of balances ≤ idle funds not reserved for flash accounting.
• Audit any pattern where multiple entry points mutate the same asset pool under different meanings.

Solve steps and PoC omitted.