Exploiting Self-Delegation

Delegation is a common feature in decentralized governance systems, allowing token holders to delegate their voting power to other participants. While this can enhance participation and efficiency, poorly implemented delegation mechanisms can introduce serious vulnerabilities. One such vulnerability arises from self-delegation, where users can exploit the delegation functionality to artificially increase their voting power. This can have a significant impact on governance, especially in smaller decentralized organizations (DAOs) or early-stage projects.

How the Self-Delegation Exploit Works

The self-delegation exploit occurs when a token holder is allowed to delegate their voting power to themselves, essentially doubling their influence in the governance process. In many cases, this exploit arises from the default behavior of the delegation mapping within the smart contract.

In a typical delegation function, token holders are allowed to delegate their voting power to any address. When the token holder delegates to themselves, the contract logic often fails to account for the initial self-delegation and misinterprets the action as transferring voting power from a null state (address(0)) to the token holder's address. As a result, the system treats this as an increase in voting power, effectively doubling it.

Here’s a step-by-step breakdown of how this works:

1. Initial State: The token holder owns a set amount of tokens but has not yet delegated their voting power.

2. Self-Delegation: The token holder calls the delegate function, specifying their own address as the delegate.

3. Voting Power Increase: Due to the absence of a prior delegate, the system interprets this self-delegation as transferring voting power from a null state (address(0)) to the holder’s address. This triggers an increase in their voting power equal to the number of tokens they hold.

4. Result: The token holder now has double the voting power, without any corresponding decrease elsewhere in the system.

This exploit is particularly problematic because it can only be performed once per token holder. Once the initial self-delegation is completed, subsequent delegations will follow the proper logic. However, this single opportunity to double voting power can be highly disruptive, especially in small DAOs or low-supply governance systems.

Impact of the Exploit

1. Disproportionate Influence: Token holders who exploit self-delegation can significantly increase their voting power beyond what they legitimately own. In small DAOs or governance systems with limited token circulation, this can have a disproportionate impact on decision-making.

2. Manipulation of Governance Outcomes: By artificially increasing their voting power, malicious actors can sway votes in their favor, pushing through proposals that benefit them or blocking those they oppose.

3. Unfair Voting Dynamics: This vulnerability undermines the fairness and integrity of decentralized governance. Honest participants are disadvantaged, as they are unable to match the inflated voting power of those exploiting self-delegation.

Example Scenario

Consider a governance system where a user holds one voting token. Under normal circumstances, this token would grant them one vote. However, if the user delegates to themselves, the system misinterprets the delegation and grants them an additional vote, effectively giving them two votes with only one token. This can also occur if the user holds multiple tokens, further amplifying the exploit's impact.

For example, if a user holds five tokens and performs a self-delegation, their voting power increases to ten, giving them undue influence in any future governance decisions.