Crypto Terms: Letter D

What is Design Flaw Attack?

Design Flaw Attack MEANING:
Design Flaw Attack - a sort of attack that uses the flaws of software design.
2 minutes

Let's find out Design Flaw Attack meaning, definition in crypto, what is Design Flaw Attack, and all other detailed facts.

A design flaw attack is a type of malicious attack with the goal to gain access to someone’s crypto funds. It takes place by an attacker creating some kind of flawed software (a smart contract, a marketplace, a DEX). This is done so that users would take action within the permissionless, decentralized software also being unaware of the errors.

As an example, let's take the decentralized prediction market platform based on the Ethereum blockchain - Augur. Some theories state that the prediction markets that are on the platform are subjects of the design flaw attacks. This is because the markets supposedly can trick people into betting their funds on a flawed contract, since they have unclear descriptions. This could result in lost funds for the investor.

Also, these types of attacks could potentially target price feeds and other similar sources of information. The malicious actor can exploit and manipulate any smart contract that depends on the particular data source. This can be achieved due to the protocol or a marketplace having only one price source API.

It can be discontinued even before the expiration date which offers the attacker an opportunity to complete his plan.

Usually, a design flaw attack creates fake opportunities that are very visible to consumers, so that they would lock their cash within a smart contract. An unfair settlement and a release of capital is an outcome of a faulty, and believable description of some contract terms or the protocol upon which they are based. The description usually illustrates a lot of benefits for the user.

Moreover, another way a malicious actor could carry on with his design flaw attack is to discover an already existing contract that, indeed, has flaws. Usually, it was created by another person that didn’t have any bad intentions.

This way, the attack would concentrate on the knowledge imbalance between the attacker and any possible accessible network member.