Summary

Critical vulnerability in DAO membership system allows creators to arbitrarily increase the total membership cap (maxMembers) after DAO creation, enabling unauthorized dilution of existing member value through share inflation.

Vulnerability Details

• Location: MembershipFactory.sol:updateDAOMembership

• Attack Flow:

  1. Creator sets initial maxMembers (e.g., 100)

  2. Members join based on fixed supply assumption

  3. Creator increases maxMembers via updateDAOMembership

  4. New memberships dilute existing holders

Vulnerable Code Pattern:

Impact

• Existing members face immediate value dilution

• Breaks core economic assumptions of DAO

• No governance protection for member interests

• Enables creator to profit through inflation

Tools Used

• Manual code review

Recommendations

1. Make maxMembers Immutable:

1. Implement Governance:

   • Require member vote for maxMembers changes

   • Add time-lock for major parameter updates