Smart Contracts Authorization: A Double-Edged Sword of Blockchain Security

Cryptocurrency and Blockchain technology are reshaping the financial sector, but this transformation has also brought new security challenges. Attackers are no longer limited to exploiting technical vulnerabilities; instead, they are turning the Blockchain protocols themselves into tools for attack. Through meticulously designed social engineering traps, they leverage the transparency and irreversibility of Blockchain to convert user trust into a means for asset theft. From carefully constructed smart contracts to manipulating cross-chain transactions, these attacks are not only covert and hard to trace but also more deceptive due to their "legitimate" appearance. This article will analyze real cases, revealing how attackers turn protocols into vehicles for attack and provide a comprehensive solution ranging from technical safeguards to behavioral prevention, helping you navigate safely in a decentralized world.

1. How do agreements become tools for fraud?

The original intention of blockchain protocols is to ensure security and trust, but attackers exploit their characteristics, combined with user negligence, to create various covert attack methods. Here are some techniques and their technical details:

(1) malicious smart contracts authorization

Technical Principles:

On blockchain platforms like Ethereum, the ERC-20 token standard allows users to authorize third parties (usually smart contracts) to withdraw a specified amount of tokens from their wallets through the "Approve" function. This feature is widely used in DeFi protocols, where users need to authorize smart contracts to complete transactions, stake, or engage in liquidity mining. However, attackers exploit this mechanism to design malicious contracts.

How it works:

Attackers create DApps disguised as legitimate projects, often promoted through phishing websites or social media. Users connect their wallets and are induced to click "Approve", which appears to authorize a small amount of tokens, but in reality, it may grant unlimited access (uint256.max value). Once the authorization is complete, the attacker's contract address gains permission to call the "TransferFrom" function at any time, allowing them to withdraw all corresponding tokens from the user's wallet.

Real Case:

In early 2023, a phishing website disguised as "some DEX upgrade" caused hundreds of users to lose millions of dollars in USDT and ETH. On-chain data shows that these transactions fully comply with the ERC-20 standard, and the victims are even unable to recover their losses through legal means, as the authorizations were voluntarily signed.

(2) signature phishing

Technical Principles:

Blockchain transactions require users to generate signatures using their private keys to prove the legitimacy of the transaction. Wallets typically pop up a signature request, and once the user confirms, the transaction is broadcast to the network. Attackers exploit this process to forge signature requests and steal assets.

How it works:

Users receive emails or social media messages disguised as official notifications, such as "Your NFT airdrop is ready to claim, please verify your wallet." After clicking the link, users are directed to a malicious website that asks them to connect their wallet and sign a "verification transaction." This transaction could actually be calling the "Transfer" function, directly transferring ETH or tokens from the wallet to the attacker's address; or it could be a "SetApprovalForAll" operation, authorizing the attacker to control the user's NFT collection.

Real Case:

A well-known NFT project community has encountered a signature phishing attack, with multiple users losing NFTs worth millions of dollars due to signing forged "airdrop claim" transactions. The attackers exploited the EIP-712 signature standard to forge seemingly safe requests.

(3) Fake tokens and "dust attacks"

Technical Principles:

The openness of the Blockchain allows anyone to send tokens to any address, even if the recipient has not actively requested them. Attackers take advantage of this by sending small amounts of cryptocurrency to multiple wallet addresses to track the activity of the wallets and associate them with the individuals or companies that own the wallets.

How it works:

Attackers send small amounts of cryptocurrency to different addresses in an attempt to identify which belong to the same wallet. Then, using this information, they launch phishing attacks or threats against the victims. In most cases, the "dust" used in dusting attacks is distributed to user wallets in the form of airdrops, and these tokens may carry specific names or metadata that entice users to visit a certain website for details.

Real Case:

The "GAS token" dusting attack occurred on the Ethereum network, affecting thousands of wallets. Some users lost ETH and ERC-20 tokens due to curiosity and interaction.

2. Why are these scams difficult to detect?

The success of these scams is largely due to their concealment within the legitimate mechanisms of Blockchain, making it difficult for ordinary users to discern their malicious nature. The main reasons include:

• Technical Complexity: The code for smart contracts and signature requests is obscure and difficult for non-technical users to understand.
• On-chain legality: All transactions are recorded on the Blockchain, appearing transparent, but victims often realize the consequences of authorization or signatures only after the fact.
• Social Engineering: Attackers exploit human weaknesses, such as greed, fear, or trust.
• Clever Disguise: Phishing websites may use URLs similar to the official domain and even enhance credibility through HTTPS certificates.

3. How to Protect Your Cryptocurrency Wallet?

In the face of scams that coexist with both technical and psychological warfare, protecting assets requires a multi-layered strategy. Here are detailed preventive measures:

Check and manage authorization permissions

• Use the authorization check tool of the blockchain explorer to regularly check the authorization records of the wallet.
• Revoke unnecessary authorizations, especially unlimited authorizations to unknown addresses.
• Before each authorization, ensure that the DApp comes from a trusted source.

Verify the link and source

• Manually enter the official URL to avoid clicking on links in social media or emails.
• Ensure the website uses the correct domain name and SSL certificate.
• Be wary of domain names with spelling errors or extra characters.

use cold wallets and multi-signatures

• Store most of your assets in a hardware wallet and connect to the network only when necessary.
• For large assets, use multi-signature tools that require multiple keys to confirm transactions.

Be cautious when handling signature requests

• Carefully read the transaction details in the wallet pop-up each time you sign.
• Use the decoding function of the blockchain explorer to analyze the signature content, or consult a technical expert.
• Create a separate wallet for high-risk operations and store a small amount of assets.

Responding to dust attacks

• Do not interact after receiving unknown tokens. Mark them as "spam" or hide them.
• Confirm the source of tokens through the Blockchain explorer, and be highly vigilant if it is a batch send.
• Avoid publicly sharing your wallet address, or use a new address for sensitive operations.

Conclusion

Implementing the above security measures can significantly reduce the risk of becoming a victim of advanced fraud schemes, but true security does not solely rely on technology. When hardware wallets build a physical defense and multi-signatures disperse risk, the user's understanding of authorization logic and caution regarding on-chain behavior become the final bastion against attacks.

In the future, regardless of how technology iterates, the core defense always lies in: internalizing security awareness as a habit and establishing a balance between trust and verification. In the blockchain world where code is law, every click and every transaction are permanently recorded and cannot be changed. Staying alert and acting cautiously is essential to safely navigate this emerging digital financial realm.