Security Considerations

⚠️ Current Security Status (Hackathon Phase)

Important Warning: Gelap is currently in the Alpha / Hackathon phase.

While the protocol incorporates advanced privacy and security features, the smart contracts and SP1 circuits have not yet undergone a formal third-party security audit.

• Current Status: Internal Self-Audit & Testing.

• Audit Roadmap: A comprehensive professional audit is scheduled for the next phase of development (Post-Hackathon).

• Recommendation: Please treat the current deployment as experimental software. Do not deposit funds you cannot afford to lose.

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Overview

This document outlines security considerations, best practices, and potential vulnerabilities for the Gelap shielded pool system.

Threat Model

Assets at Risk

• User Funds: ERC20 tokens deposited in the shielded pool

• Privacy: Transaction amounts and participant identities

• System Integrity: Merkle tree state and nullifier tracking

Threat Actors

• Malicious Users: Attempting double-spends or invalid transactions

• Front-runners: Trying to manipulate withdrawal transactions

• Contract Exploiters: Looking for smart contract vulnerabilities

• Privacy Attackers: Attempting to deanonymize transactions

Security Features

✅ Implemented Protections

1. Double-Spend Prevention

Mechanism: Nullifier tracking

mapping(bytes32 => bool) public nullifierUsed;

Protection:

• Each note can only be spent once

• Nullifiers are checked before state updates

• Reverts if nullifier already used

2. Front-Running Protection

Mechanism: Receiver validation in withdrawals

require(pub.receiver == receiver, "Receiver mismatch");

Protection:

• Receiver address is part of the ZK proof

• Cannot redirect withdrawal to different address

• Prevents MEV attacks on withdrawals

3. Invalid State Transition Prevention

Mechanism: SP1 ZK proof verification

ISP1Verifier(sp1Verifier).verifyProof(
    sp1ProgramVKey,
    publicInputs,
    proofBytes
);

Protection:

• All state transitions must have valid proof

• Ensures balance conservation

• Validates Merkle tree updates

4. Input Validation

Mechanism: Require statements

require(token != address(0), "Invalid token");
require(amount > 0, "Invalid amount");

Protection:

• Prevents zero-address exploits

• Ensures valid amounts

• Validates all inputs

Potential Vulnerabilities

⚠️ Areas Requiring Attention

1. SP1 Program Correctness

Risk: If the SP1 program has bugs, invalid proofs could be generated

Mitigation:

• Thorough testing of SP1 program

• Formal verification of critical logic

• Security audit of prover code

• Use well-tested cryptographic libraries

2. Merkle Tree Overflow

Risk: Tree limited to 2^32 leaves

Current State:

require(index < (1 << 32), "Merkle tree full");

Mitigation:

• Monitor tree growth

• Plan migration strategy before limit

• Consider multiple trees or rollup integration

3. ERC20 Token Compatibility

Risk: Non-standard ERC20 tokens may behave unexpectedly

Examples:

• Fee-on-transfer tokens

• Rebasing tokens

• Tokens with hooks

Mitigation:

• Whitelist supported tokens

• Document incompatible token types

• Add token validation checks

4. Encrypted Memo Privacy

Risk: Encrypted memos could leak information if not properly encrypted

Mitigation:

• Use strong encryption (AES-256-GCM)

• Unique nonces for each memo

• Document encryption requirements

• Consider removing memos if not needed

5. Verifier Contract Trust

Risk: Malicious or buggy SP1 verifier could accept invalid proofs

Mitigation:

• Use official SP1 verifier deployments

• Verify verifier contract source code

• Monitor for verifier upgrades

• Consider multi-verifier approach

Best Practices

For Users

Key Management

• Use Hardware Wallets: Store private keys securely

• Backup Notes: Save all note data (commitment, blinding, amount)

• Never Reuse Blinding Factors: Always use fresh randomness

• Secure Note Storage: Encrypt local note database

Transaction Safety

• Verify Addresses: Double-check receiver addresses

• Test Small Amounts: Start with small transactions

• Monitor Events: Track your deposits and withdrawals

• Use Trusted Provers: Only use verified prover services

For Developers

Smart Contract Development

• Follow Checks-Effects-Interactions: Prevent reentrancy

• Use SafeERC20: Handle token transfers safely

• Validate All Inputs: Never trust user input

• Emit Events: Enable off-chain tracking

• Add Access Control: If admin functions needed

Prover Development

• Validate Inputs: Check all prover inputs

• Use Constant-Time Operations: Prevent timing attacks

• Secure Randomness: Use cryptographically secure RNG

• Test Edge Cases: Boundary conditions and overflows

• Audit Dependencies: Review all libraries used

For Operators

Deployment

• Audit Before Mainnet: Professional security audit required

• Test on Testnet: Extensive testing before production

• Verify Contracts: Ensure source code matches deployment

• Monitor Deployments: Track contract activity

• Emergency Plan: Have incident response ready

Monitoring

• Track Nullifiers: Monitor for unusual patterns

• Watch Gas Costs: Detect potential DoS attacks

• Monitor Tree Growth: Plan for capacity limits

• Alert on Anomalies: Set up automated alerts

• Regular Audits: Periodic security reviews

Known Limitations

1. No Upgradability

Current State: Contract is not upgradeable

Implications:

• Cannot fix bugs without migration

• Cannot add features post-deployment

• State migration required for upgrades

Consideration: Implement proxy pattern for future versions

2. No Emergency Pause

Current State: No pause mechanism

Implications:

• Cannot stop operations if bug found

• Users could lose funds before fix

Consideration: Add Pausable pattern for critical functions

3. No Access Control

Current State: All functions are permissionless

Implications:

• Cannot restrict malicious actors

• No admin controls

Consideration: This is by design for decentralization, but consider adding optional admin functions for emergency situations

4. Linear Nullifier Checking

Current State: Gas cost increases with number of nullifiers

Implications:

• Expensive for transactions with many inputs

• Potential DoS vector

Consideration: Optimize with batch verification or alternative data structures

Privacy Considerations

What is Private

• ✅ Transaction amounts

• ✅ Sender identity

• ✅ Receiver identity

• ✅ Transaction graph

What is Public

• ❌ Deposit events (commitment visible)

• ❌ Withdrawal events (receiver, amount visible)

• ❌ Total value locked

• ❌ Number of transactions

• ❌ Merkle root changes

Privacy Leaks

Timing Analysis

Risk: Transaction timing could reveal patterns

Mitigation:

• Use random delays

• Batch transactions

• Mix with other users' transactions

Amount Correlation

Risk: Unique amounts could link deposits to withdrawals

Mitigation:

• Use common denominations

• Split large amounts

• Add random change outputs

Network Analysis

Risk: IP addresses could deanonymize users

Mitigation:

• Use Tor or VPN

• Run own prover locally

• Use privacy-focused RPC endpoints

Audit Recommendations

Scope

• Smart contract code

• SP1 program logic

• Cryptographic implementations

• Merkle tree operations

• Integration points

Focus Areas

1. Nullifier Generation: Ensure uniqueness and unlinkability

2. Merkle Proofs: Validate correctness

3. Balance Conservation: Verify no token creation

4. Access Control: Check permission boundaries

5. Reentrancy: Test all external calls

Audit Checklist

• Static analysis (Slither, Mythril)

• Manual code review

• Formal verification of critical paths

• Fuzz testing

• Integration testing with real proofs

• Gas optimization review

• Economic attack analysis

Incident Response

If Vulnerability Found

1. Assess Severity

   • Critical: Funds at risk

   • High: Privacy breach possible

   • Medium: DoS or degradation

   • Low: Minor issues

2. Immediate Actions

   • Pause operations (if possible)

   • Notify users via official channels

   • Assemble response team

   • Document the issue

3. Remediation

   • Develop fix

   • Test thoroughly

   • Deploy to testnet

   • Audit the fix

   • Deploy to mainnet

   • Migrate state if needed

4. Post-Incident

   • Post-mortem analysis

   • Update documentation

   • Improve testing

   • Compensate affected users if applicable

Security Resources

Tools

• Slither: Static analyzer

• Mythril: Security analysis

• Echidna: Fuzzing tool

• Manticore: Symbolic execution

• Foundry: Testing framework

References

• Smart Contract Security Best Practices

• SP1 Security Documentation

• OpenZeppelin Security

Responsible Disclosure

If you discover a security vulnerability:

1. Do NOT disclose publicly

2. Email: [e-mail]

3. Include:

   • Description of vulnerability

   • Steps to reproduce

   • Potential impact

   • Suggested fix (if any)

4. Wait for response before disclosure

5. Coordinate disclosure timeline

Bug Bounty

Consider launching a bug bounty program:

• Platform: Immunefi or HackerOne

• Scope: Smart contracts and prover

• Rewards: Based on severity

• Critical: Up to $100,000

• High: Up to $50,000

• Medium: Up to $10,000

• Low: Up to $1,000

Conclusion

Security is an ongoing process. Regular audits, monitoring, and updates are essential for maintaining a secure system. Always prioritize user safety and privacy.