Klever: Marketplace settlement mints KLV when referral % + royalty % exceed the bid (negative seller share silently skipped)

Summary

When a marketplace order is settled (MarketBuy / BuyItNow, and auction Claim), the buyer's payment is split three ways — referral, royalties, and the seller (market-order owner) remainder:

marketOwnerAmount = CurrentBid − referralAmount − royaltiesAmount

Referral and royalties are paid out unconditionally, but the seller remainder is only paid when positive (computeMarketOwnerAmount returns Ok and pays nothing when the amount is <= 0). When referral% + royalty% exceeds 100% of the bid, marketOwnerAmount goes negative and is silently skipped — so the marketplace pays out more KLV / sale currency than the buyer paid in, minting the difference out of thin air.

The combined ceiling royalty% + referral% <= 100% is checked once, at listing time (Sell). But the two percentages are sourced asymmetrically at settlement:

- referral % is snapshotted into the order at Sell (MarketOrderData.ReferralPercentage); - royalty % is never snapshotted — it is read live from the asset at buy time (asset.Royalties.MarketPercentage).

So the listing-time invariant is a time-of-check/time-of-use guarantee only. After a valid listing, the asset owner raises the royalty MarketPercentage via AssetTrigger → UpdateRoyalties; at the next buy the live royalty plus the snapshotted referral exceed 100%, and the settlement mints the overflow. The minted funds land in attacker-controlled referral / royalty addresses.

This was actively exploited on mainnet (see *Evidence*), minting tens of millions of KLV before the emergency guard was deployed.

Affected component

- Repository: klever-io/klever-go (node). - Settlement / mint site: core/kapp/market/market.go — executeBuyMarket (L575+), computeReferralAmount (L361+), computeRoyaltiesAmount (L490+), computeRoyaltiesFixedDeposit (L443+), computeMarketOwnerAmount (L540+). - TOCTOU sources: Sell combined check (market.go:908), order snapshot of referral but not royalty (market.go:997), live royalty mutation via core/kapp/kda/trigger.go — handleUpdateRoyaltiesNFTandSFT (L613+, sets asset.Royalties.MarketPercentage at L670). - Reachable from both Buy (BuyItNow, market.go:204+) and auction Claim (market.go:705, market.go:731). - Pre-fix: not gated by any fork flag — exploitable on mainnet. The fix is gated behind the new FixMarketBuyOverflow activation-epoch flag.

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Root cause

### 1. Settlement pays referral + royalty unconditionally, seller remainder only if positive core/kapp/market/market.go — executeBuyMarket (L575+): ``go referralAmount, _ := tools.ComputePercentageI64(marketOrder.CurrentBid, int64(marketOrder.ReferralPercentage), ...) // L583: SNAPSHOT referral % royaltiesAmount, _ := tools.ComputePercentageI64(marketOrder.CurrentBid, int64(asset.Royalties.MarketPercentage), ...) // L587: LIVE royalty % marketOwnerAmount := marketOrder.CurrentBid - referralAmount - royaltiesAmount // L591: can go negative // ---- FIX (FixMarketBuyOverflow), added by the patch ---- if m.forkController.FixMarketBuyOverflow() && marketOwnerAmount < 0 { // L593-596 ctx.Receipts().AddError(ctx.ContractID(), common.ErrFieldInvalidRoyalties, common.ErrInvalidValue.Error()) return transaction.Transaction_AmountInvalid, common.ErrInvalidValue } m.computeReferralAmount(ctx, marketOrder, referralAmount, currencyID) // pays referral in full m.computeRoyaltiesFixedDeposit(ctx, marketOrder, asset) // pays fixed royalty (KLV) m.computeRoyaltiesAmount(ctx, marketOrder, asset, currencyID, royaltiesAmount) // pays % royalty in full m.computeMarketOwnerAmount(ctx, marketOrder, currencyID, marketOwnerAmount) // <-- skips when <= 0 ``

computeMarketOwnerAmount (L540-542) — the silent skip: ``go func (m *marketKapp) computeMarketOwnerAmount(... marketOwnerAmount int64) (... , error) { if marketOwnerAmount <= 0 { return transaction.Transaction_Ok, nil // negative seller share dropped, NO error } // ... AddToBalance(marketOwnerAmount) ... } ``

Meanwhile computeReferralAmount (L376) and computeRoyaltiesAmount (L515) each AddToBalance(...) the full computed amount with no matching debit from the buyer beyond the single bidderAcc.SubFromBalance(amount) taken in Buy (market.go:301).

Conservation breaks: buyer is debited bid once; recipients are credited referralAmount + royaltiesAmount. When that sum > bid, the surplus (referralAmount + royaltiesAmount − bid) is minted.

### 2. The combined ≤100% invariant is enforced only at listing time Sell (market.go:908) correctly rejects a listing whose combined cut exceeds 100%: ``go if asset.Royalties.MarketPercentage + marketplace.ReferralPercentage > core.HundredPercent { return transaction.Transaction_ParameterInvalid, common.ErrInvalidValue } ``

…and snapshots referral into the order, but not royalty (market.go:997-998): ``go marketOrder := &kapps.MarketOrderData{ // ... ReferralPercentage: marketplace.ReferralPercentage, // snapshotted RoyaltiesFixedDeposit: asset.Royalties.MarketFixed, // snapshotted // NOTE: asset.Royalties.MarketPercentage is NOT snapshotted -> read live at buy } ``

MarketOrderData has no field for the royalty percentage (kapps/market.pb.go), so settlement always re-reads it live from the (mutable) asset.

### 3. Royalty % is mutable after listing core/kapp/kda/trigger.go — handleUpdateRoyaltiesNFTandSFT (L613+) lets the asset owner overwrite asset.Royalties.MarketPercentage (L670) with only a per-field <= 100% check (CheckValid100Params, L651) — it has no knowledge of any outstanding marketplace listing's snapshotted referral. So the owner can list at, e.g., referral 100% / royalty 0% (sum 100%, passes Sell), then raise royalty to 100%, making the buy-time sum 200%.

> The shipped emergency-guard source documents this exact vector: > *"The royalty percentage is read live at buy time, so a listing made now can be weaponised later > via UpdateRoyalties."* (common/emergencyGuard.go)

Net effect: referralAmount + royaltiesAmount = bid + bid = 2·bid; marketOwnerAmount = −bid (skipped); **bid KLV minted per settlement**, paid to attacker-controlled addresses.

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Proof of

Concept

### A. Committed regression test (deterministic, runnable today) core/kapp/market/market_test.go — TestMarketKApp_ExecuteBuyMarket_RoyaltyReferralInflation. It builds an order with ReferralPercentage = 100% and an asset with MarketPercentage = 100% (the attacker is both the referral and the royalty address), then settles a bid of 25,600,000 KLV (25600000000000 base units):

go test ./core/kapp/market/ -run TestMarketKApp_ExecuteBuyMarket_RoyaltyReferralInflation -v

- FixDisabled_MintsKLVFromThinAir: settlement returns Ok; the attacker address ends with 2·bid credited while only bid was paid in — i.e. **bid KLV minted**. - FixEnabled_RejectsInflation: with FixMarketBuyOverflow on, settlement returns Transaction_AmountInvalid and the attacker balance stays 0 — no payout runs.

### B. End-to-end on a local node (the real attack path) A single-node local network is sufficient. The exploit is four transactions from one ordinary funded account; nothing privileged is required.

1. Create an NFT collection you own, with royalties.marketPercentage = 0 and a royalties address you control. 2. Create a marketplace with referralPercentage = 10000 (100%) and a referral address you control (CreateMarketplace). 3. List one NFT for sale (Sell) on that marketplace. The Sell check passes because 0 (royalty) + 10000 (referral) = 10000 = HundredPercent. The order snapshots ReferralPercentage = 10000. 4. Raise the royalty on the asset to 100% (AssetTrigger / UpdateRoyalties, marketPercentage = 10000). Allowed: the per-field check passes and the live combined invariant is never re-evaluated against the open listing. 5. Buy the listing (MarketBuy) from a second account (or settle the auction via Claim). referralAmount = bid, royaltiesAmount = bid, marketOwnerAmount = −bid (skipped). Your referral + royalty addresses receive 2·bid; the buyer paid bid; **bid KLV is minted**.

Because the attacker controls buyer, seller, referral and royalty addresses, the only real cost is transaction fees; the cycle is repeatable until supply targets are met.

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Evidence

### Regression test (local, verbatim) `` === RUN TestMarketKApp_ExecuteBuyMarket_RoyaltyReferralInflation === RUN TestMarketKApp_ExecuteBuyMarket_RoyaltyReferralInflation/FixDisabled_MintsKLVFromThinAir === RUN TestMarketKApp_ExecuteBuyMarket_RoyaltyReferralInflation/FixEnabled_RejectsInflation --- PASS: TestMarketKApp_ExecuteBuyMarket_RoyaltyReferralInflation (0.00s) --- PASS: TestMarketKApp_ExecuteBuyMarket_RoyaltyReferralInflation/FixDisabled_MintsKLVFromThinAir (0.00s) --- PASS: TestMarketKApp_ExecuteBuyMarket_RoyaltyReferralInflation/FixEnabled_RejectsInflation (0.00s) PASS ok github.com/klever-io/klever-go/core/kapp/market 0.279s ``

FixDisabled asserts the attacker balance equals 2·bid = 51,200,000 KLV for a single settlement (bid = 25,600,000 KLV), with bid of that minted. FixEnabled asserts rejection and a 0 balance.

### Mainnet exploitation (observed) The bug was exploited in production, and was detected and characterised externally by the community monitoring project **KleverPuls / kpulse.tech before the root cause was known internally. Over a ~24h window kpulse isolated a single wallet (opened 2026-06-04, ~204 transactions in ~24h, funded only by a ~242K KLV KuCoin withdrawal**, no treasury/foundation funding) that:

- self-issued 3 NFT collections named "InflationPOC" and **wash-traded one (NFLATION-ESGO/1) 29 times through self-created marketplaces — ~$450K of artificial, economically empty NFT volume; - swapped the proceeds KLV → USDC / USDT / WBTC / WETH on KleverSwap and bridged ~$72K of value to Ethereum via wrapped-asset burns over 24h (USDC −12,487 ≈ $12.5K; USDT −26,362 ≈ $26.4K; WBTC −0.31 ≈ $19.6K; WETH −7.55 ≈ $14K); - surfaced a spurious "1.86B KLV outflow" headline that kpulse correctly identified as a wash-trade receipt-doubling** artifact with small real net KLV flow.

That "doubling of marketplace receipts" is precisely the on-chain signature of this bug: each abusive settlement pays out a referral cut (bid) plus a royalty cut (bid) while the buyer paid only bid once — the market contract emits ~2× the value it took in, which *is* the mint. The attacker's self-issued collection and self-created marketplaces are exactly the self-dealing setup the regression test reproduces (the test reuses the real on-chain identifiers: collectionID = "NFLATION-ESGO", asset 1, market name "Inflation Market").

kpulse could not determine the cause from on-chain data alone and flagged the activity for confirmation; the Klever core team then traced it to the referral+royalty settlement defect described above and shipped the emergency guard + protocol fix.

Each abusive settlement minted one bid of KLV; the observed bid was 25,600,000 KLV, repeated and funnelled through a short hop chain before being swapped and bridged. The emergency guard (common/emergencyGuard.go) blocks the following observed sender public keys (hex):

| Public key (hex) | Address | Role (observed) | |---|---|---| | 54ea28e527d4136508be955374afa54a8c25c19a48c674f412f7ce02db0f4e1b | klv12n4z3ef86sfk2z97j4fhfta9f2xztsv6frr8faqj7l8q9kc0fcdsfjfqez | root / minter | | bb687dbba23e1844fec674a32cb8809f0d3207506c53fc3d637e40dc56708d63 | klv1hd58mwaz8cvyflkxwj3jewyqnuxnyp6sd3flc0tr0eqdc4ns343skngdjq | collector hop (~125M KLV) | | 77388d3dfe6cd88e8da723254c11abf3d9cccb6fb77b000e5038fc3ff92b964d | klv1wuug6007dnvgard8yvj5cydt70vuejm0kaasqrjs8r7rl7ftjexsglalf6 | direct recipient (25.6M, idle) | | a196789b026f996867f08317cc6c5a4eb9ad3a59b1be3716420bc8692d4c3048 | klv15xt83xczd7vkselssvtucmz6f6u66wjekxlrw9jzp0yxjt2vxpyq2nawrw | hop-2 recipient (25M) |

The single-bid per-settlement size (25.6M KLV) matches the "direct recipient, 25.6M" entry, and the ~125M at the collector hop is consistent with roughly five abusive settlements.

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Impact

- Unbounded inflation of KLV (and of any sale currency used for the listing), repeatable for only transaction fees, by any account that creates its own collection + marketplace. - The minted KLV is created by direct AddToBalance to attacker addresses (no tracked Mint), so the asset's booked supply does not change — the inflation is off the books and only detectable by summing balances / auditing receipts (it surfaces on-chain as *doubled* marketplace receipts). - Realized impact (observed): the attacker minted KLV via ~29 self-dealt settlements, swapped to stable/wrapped assets on KleverSwap, and off-ramped ~$72K to Ethereum via the bridge (USDC, USDT, WBTC, WETH) before the emergency guard halted the activity, alongside ~$450K of artificial NFT wash-trade volume. - Total loss of economic integrity for all KLV / token holders.

Who can exploit it / prerequisites

- Any account that can pay the one-time collection-create + marketplace-create fees and tx fees. No roles, admin, or allowlist. - Any client. The settlement is triggered by standard MarketBuy / Claim contracts POSTed to the public, unauthenticated /transaction/send RPC (network/api/transaction/routes.go, SendTX / BroadcastTX). The operator CLI, the SDKs, or a hand-signed curl all work. - Deterministic; the abusive state is reached with one extra UpdateRoyalties after a normal listing.

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Remediation

Shipped as a layered response (embargoed):

### Layer 0 — emergency guard (deployed first, fork-proof) — GHSA-p7gw rc1 common/emergencyGuard.go + data/transaction/emergencyGuard.go: matching transactions are kept out of blocks this node proposes (core/process/block/preprocess/transactions.go) and refused at the node API (node.go SendTransaction / SendBulkTransactions). It never changes block validity, so a partial-fleet rollout cannot fork the chain. It blocks the known attacker senders (all contract types) plus all MarketBuy, Sell, and CreateMarketplace / ConfigMarketplace operations while the protocol fix rolls out. Enforcement is by proposer cooperation, not protocol — coverage equals the share of block producers running the guard.

### Layer 1 — protocol fix (consensus, epoch-gated) — GHSA-p7gw rc2 core/kapp/market/market.go:593 rejects the settlement when marketOwnerAmount < 0, before any payout runs, returning Transaction_AmountInvalid. Gated behind the new FixMarketBuyOverflow activation-epoch flag (config/enableEpochs.*, core/fork/forks.go, core/interface.go) so historical blocks reprocess identically. Covered by TestMarketKApp_ExecuteBuyMarket_RoyaltyReferralInflation.

### Recommended hardening (defense in depth) 1. Snapshot the royalty % into MarketOrderData at Sell (as referral already is) and pay from the snapshot, eliminating the TOCTOU entirely; or re-evaluate the combined referral% + royalty% <= 100% invariant at settlement. 2. Treat a negative seller remainder as a hard error everywhere, and only treat exactly 0 as a no-op skip (computeMarketOwnerAmount), so a future regression aborts the tx instead of minting. 3. After splitting a payment pool, assert conservation (referral + royalties + ownerShare == bid) so any drift aborts the transaction.

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Notes

- Triggered by both BuyItNow (Buy) and auction settlement (Claim). - The same family of "pay full cut, silently drop the negative remainder" minting also exists in the royalty-split paths and is tracked separately under GHSA-cgc5-v3f2-8m2v (split-royalty uint32 overflow). This advisory covers the top-level referral+royalty > bid case; the FixMarketBuyOverflow guard here only checks marketOwnerAmount, not intra-split over-payments.

Acknowledgments

- **KleverPuls / kpulse.tech — community monitoring project that first detected and characterised the exploitation in the wild**. kpulse isolated the attacker wallet and its "InflationPOC" collections, identified the marketplace wash-trading of NFLATION-ESGO/1 and the KleverSwap → bridge off-ramp (~$72K to Ethereum), and flagged the anomalous *doubling* of marketplace receipts — the exact on-chain signature of this bug — prompting the incident response that led to this fix. The root cause was then identified and remediated by the Klever core team.

Source

- Vulnerable / fixed code: core/kapp/market/market.go:540-545,575-596,908,997-998, core/kapp/kda/trigger.go:613-676, core/process/kda/assetHelper.go:101, tools/converters.go:102, core/constants.go:18. - Emergency guard: common/emergencyGuard.go, data/transaction/emergencyGuard.go, core/process/block/preprocess/transactions.go, node/node.go. - Fork flag: config/enableEpochs.go, config/node/enableEpochs.yaml, core/fork/forks.go, core/interface.go. - Regression test: core/kapp/market/market_test.go (TestMarketKApp_ExecuteBuyMarket_RoyaltyReferralInflation).