GHSA-3fp5-2xwh-fxm6: Evmos transaction execution not accounting for all state transition after interaction with precompiles

An external contributor, @iczc, discovered a way to mint arbitrary tokens due to the possibility to have two different states not in sync during the execution of a transaction. The exploit is based on the fact that to sync the Cosmos SDK state and the EVM one, we rely on the stateDB.Commit() method. When we call this method, we iterate though all the dirtyStorage and, if and only if it is different than the originStorage, we set the new state. Setting the new state means we update the Cosmos SDK KVStore.

Below, are described the steps to perform the attack:

• User send a tx to a smart contract (SC) that is calling a precompile.
• The SC perform a state transition of its state from A to B.
• The SC call the precompile.
• The SC perform a state transition of its state from B to A (revert of the previous).
• Once the transaction is executed, and the final Commit is performed, the state A will not be committed to the store because A is the same as originStorage.

If the tx is executed correctly, this is what happens at the store level:

• Initial state A is loaded from the KVStore and the dirtyStorage is set to B.
• Before running the precompile, the dirtyStorage is committed to the KVStore without changing the originStorage.
• Now, since we have a dirtyStorage, it is updated to the previous value A without changing the originStorage.

Since the tx executed correctly, the evm calls the commit to persist the dirtyStorage. However, since dirtyStorage is equal to originStorage, nothing will be changed.

To summarize, if a contract storage state that is the same before and after a transaction, but is changed during the transaction and can call an external contract after the change, it can be exploited to make the transaction similar to non-atomic. The vulnerability is critical since this could lead to drain of funds through creative SC interactions.