Security Concerns Arise in Cosmos Hub's Liquid Staking Module

Critical Security Concerns in Cosmos Hub's Liquid Staking Module

A recent report by Foresight News unveils alarming security issues associated with the Cosmos Hub's Liquid Staking Module (LSM). Developed by All in Bits, a key player in the Cosmos ecosystem, these findings raise significant concerns about the integrity of the LSM.

Key Issues Identified

• North Korean Involvement: The majority of the LSM code has reportedly been compromised by North Korean agents, casting a shadow on its development process.
• Module Integrity: Contrary to initial expectations, the LSM is not an independent module. Instead, it represents a series of modifications to existing staking, allocation, and slashing modules.
• Risk to Staked ATOM: Given its integration with established systems, these vulnerabilities could affect all staked ATOM, posing a risk to user assets.
• Slashing Avoidance Vulnerability: There exists a flaw that facilitates slashing avoidance, amplifying the risks involved with staking.
• Audit Delays: Notably, the recent code changes have gone without an audit for a staggering 19 months, igniting concerns about accountability.

Concerns About Transparency

Critiques have also been directed towards prominent players in the Cosmos ecosystem, including the Interchain Foundation (ICF), Stride Labs, and Informal Systems, for their lack of transparency in the project’s development and implementations.

Recommendations for Immediate Action

In light of these serious concerns, All in Bits issues several urgent recommendations:

1. Implement immediate fixes to address primary staking vulnerabilities in the LSM.
2. Conduct a comprehensive audit of the LSM to ensure its security and reliability.
3. Fully disclose the extent of North Korean involvement in the project.
4. Consider blacklisting ICF-related parties implicated in the misrepresentations.
5. Establish new audit and oversight protocols for all ICF-funded projects to reinforce security measures.

Background on the Liquid Staking Module

The development of the LSM commenced in 2021, initiated by the Interchain Foundation and primarily driven by Iqlusion and Zaki Manian. As the project evolved, it transformed into a collaborative effort involving Stride Labs, as well as contributions from Binary Builders and Informal Systems, with a plan to integrate it into the Gaia framework.

The Path Forward

The issues outlined not only highlight critical vulnerabilities but also present an opportunity for the entire Cosmos ecosystem to enhance its protocols, emphasizing the need for stringent security measures and transparency in future developments. Failure to act could undermine user trust and the overall stability of the Cosmos network.