Smart contract bug compromises a Tier 2 deployment

A vulnerability in a governance template module (M1–M6) is exploited in a deployed Template C or F DAO. An attacker drains the treasury, freezes governance, or manipulates membership records.

Scenario

A vulnerability in a governance template module (M1–M6) is exploited in a deployed Template C or F DAO. An attacker drains the treasury, freezes governance, or manipulates membership records.

Cost / impact

Treasury drain bounded by per-property isolation to a single DAO's funds. Governance freeze is operationally painful but not financially catastrophic across other properties. Reputational damage if the exploit is public.

Prevention

Per-module sequential audit (M1 → M6, 530–810 hours, $210k–$325k for the initial library audit). Highest-risk surfaces are M2 (Governance, 120–180 hours) and M6 (Upgrade Path; storage migration). Named invariants M2.11, M6.8, M3.8, and M5.5 are auditable and specifically mitigate the highest-risk threats.

Mitigation

Per-property isolation contains the blast radius to the affected DAO. Emergency governance procedures in M2 and M6 enable recovery. Post-exploit incident review informs patches to other deployed template instances.

Residual risk

Real but bounded. Smart contract bugs are inevitable; per-property isolation is the architectural answer. An auditor can verify isolation invariants M3.8 and M5.5 directly — this is an architectural property, not an aspirational claim.