The July 11 attacks on Compound and Celer Networks might be traced back to issues with a domain migration system, according to DNS experts. They suggest that tokenized domains could help prevent such attacks in the future.
On July 11, multiple Web3 protocols fell victim to a large-scale DNS hijacking attack. Blockchain investigator ZachXBT found that Compound Finance’s website was redirected to a phishing site aimed at stealing users’ tokens. Celer Network also reported an attack on its site, though it was detected and blocked.
Blockchain security firm Blockaid noted that the attack seemed to be related to “projects hosted on Squarespace,” hinting that the vulnerability could be tied to Squarespace’s domain registration system.
Matt Gould, founder of the tokenized domain protocol Unstoppable Domains, speculated that the issue might stem from the migration of domains from Google Domains to Squarespace. He explained:
“When moving from Google Domains to Squarespace, you have to set up a new account. This makes users easy targets for phishing attacks. Attackers might send a fake message saying, ‘You need to set up your new Squarespace account. Click this link to do it before time runs out.’”
Victor Zhou, founder of Namefi, echoed similar concerns. He suggested that the problem could be related to Google’s recent sale of its domain business to Squarespace. Zhou pointed out that the migration process might have disrupted Multi–Factor Authentication (MFA), making it easier for attackers to exploit.
A report from Security Alliance also blamed the faulty migration process. It suggested that Squarespace might have automatically linked domains to the email addresses used with Google Domains. Since Squarespace did not require email verification for new accounts, attackers could gain access using just the email address associated with the domain.
The report stated:
“We believe the most likely cause was that Squarespace assumed users migrating from Google Domains would use the ‘Continue with Google’ login method. Squarespace did not consider the possibility that an attacker could sign up using an email from a recently-migrated domain.”
Squarespace did not respond to requests for comment by the time of publication.
Gould proposed that future attacks could be prevented if Web3 protocols tokenize their domains and store them on a blockchain. This would involve verifying DNS changes through a signed message from the domain owner’s key, adding an extra layer of security.
“For added protection, you could use a two-of-three multisignature system, where at least two team members must approve changes to DNS settings,” Gould suggested.
Another approach would be to place the web registrar itself on the blockchain, eliminating the need for migrations. This would make changing providers as simple as switching merchants, avoiding issues like those seen with the recent attacks.
Summary Review: The recent DNS attacks on Compound and Celer Networks on July 11 may have been linked to issues in the migration of domain names from Google Domains to Squarespace. Experts suggest that these vulnerabilities might have been exploited due to a faulty migration system that made it easier for attackers to hijack domains. The attacks highlight the need for improved security measures in domain management. Experts advocate for the use of tokenized domains on blockchain networks, which could provide a more secure and tamper-proof system. By incorporating additional verification steps and considering a blockchain–based approach for domain registration, the risk of such attacks could be significantly reduced in the future.
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