Idle

Authors: samczsun (SEAL), dickson (SEAL), @william (Pareto)

---

Introduction

This proposal outlines Pareto’s adoption of the SEAL (Security Alliance) Whitehat Safe Harbor Agreement (“Safe Harbor Agreement”). By adopting Safe Harbor, Pareto improves the security of its on-chain assets by allowing whitehats to intervene during active exploits to save protocol funds.

What is the Safe Harbor Agreement?

The Safe Harbor Agreement addresses a critical need in crypto: enabling whitehats to intervene during active exploits when traditional responsible disclosure procedures are not feasible.

Key aspects of the agreement include:

• Encouraging Whitehats to Protect the Protocol: By adopting Safe Harbor, Pareto incentivizes whitehats to step in and protect the protocol during active exploits by limiting their legal exposure.

• Intervention Only During Active Exploits: Whitehats are authorized to act only when there is an immediate or ongoing exploit that threatens the protocol. This agreement applies only to critical situations where responsible disclosure procedures would not save funds due to the urgency of the exploit, and it is not intended for routine security testing or vulnerability reporting.

• Mandatory Return of Rescued Funds: Under the terms of the Safe Harbor, whitehats are required to return all rescued assets to a pre-designated recovery address controlled by the protocol within 72 hours of recovering them. This ensures that recovered funds are quickly secured, preventing delay or potential loss.

• Clear Guidelines and Legal Protection: The agreement establishes strict rules for how whitehats must operate during an exploit, ensuring recovery efforts are conducted professionally and safely, minimizing the risk of mistakes or further damage to the protocol. By adhering to these guidelines, whitehats can limit their potential legal exposure, allowing them to act in good faith without fear of liability.

• Incentivized Rescue Efforts: To motivate whitehats to act during critical situations, the agreement offers a bounty system similar to a bug bounty. Whitehats are rewarded with a percentage of the recovered assets, up to a predefined cap, for their successful interventions.

---

Rationale

Pareto is committed to enhancing its security and protecting user funds during critical moments. While security audits and other preventive measures are crucial, the unpredictable nature of exploits requires a swift, decisive response mechanism to minimize potential damage.

The Safe Harbor Agreement empowers whitehats to act immediately during an active exploit, providing a proactive and structured recovery process. By enabling whitehats to step in and recover assets during a crisis, Pareto strengthens its defenses against emerging threats.

Benefits of adopting the Safe Harbor Agreement include:

• Agile Defense Against Exploits: Whitehats are authorized to intervene as soon as an active exploit is detected, enabling them to respond faster than traditional methods. This ensures that Pareto is protected against threats even without the ability to halt the protocol. Immediate action minimizes the window for malicious actors, reduces damages, and accelerates the recovery of assets during critical moments.

• Clarified Rescue Process: The agreement ensures that every step, from intervention to fund recovery, is predetermined and streamlined. Whitehats know exactly where to send recovered funds, preventing chaotic negotiations or rushed decisions during an exploit. This clarity ensures efficient, decisive action when it matters most.

• Clear Financial Boundaries: The predefined bounty system, with a cap matching Pareto’s existing bug bounty, ensures that whitehats are incentivized fairly without creating conflicting priorities between exploit intervention and standard vulnerability disclosure. By setting expectations upfront, it eliminates post-exploit negotiations, ensuring funds are returned promptly without attempts to change the reward amount, keeping the process fair and transparent.

• Aligning with Industry Best Practices: By adopting the Safe Harbor Agreement, Pareto aligns itself with leading security practices across the industry, reinforcing its commitment to staying at the forefront of protocol security.

Adoption of the agreement complements audits by providing an additional layer of security, ensuring that the protocol is better prepared to respond to active threats.

---

Adoption Details

Pareto will adopt the agreement with the following parameters.

1. Asset Recovery Address: Addresses controlled by Pareto, which recovered funds will be returned to in the event of a hack.

Chain	Address
Ethereum	0xfb3bd022d5dacf95ee28a6b07825d4ff9c5b3814
Optimism	0xFDbB4d606C199F091143BD604C85c191a526fbd0
Arbitrum	0xf40d482d7fc94c30b256dc7e722033bae68ecf90
Polygon	0x61A944Ca131Ab78B23c8449e0A2eF935981D5cF6

2. Scope: List of all on-chain assets protected under Safe Harbor

Chain	Name	Address	Type (None, Existing Only, All)
Ethereum	Pareto Deployer	0xE5Dab8208c1F4cce15883348B72086dBace3e64B	All
Optimism	Pareto Deployer	0xE5Dab8208c1F4cce15883348B72086dBace3e64B	All
Arbitrum	Pareto Deployer	0xE5Dab8208c1F4cce15883348B72086dBace3e64B	All
Polygon	Pareto Deployer	0xE5Dab8208c1F4cce15883348B72086dBace3e64B	All

• “All”: The Safe Harbor Agreement will cover both the subcontracts currently deployed under this contract and any future subcontracts deployed through it. This ensures that all present and future subcontracts are protected.

• In this case, all contracts deployed by the Pareto Deployer EOA would be under scope

3. Contact Details: Designated security contact for Pareto

   • Name: William (@bugduino)

   • Contact Information: security@pareto.credit

4. Bounty Terms: Predetermined rewards for successful whitehats that protect protocol funds

   • Bounty Percentage: 10% of recovered funds.

   • Bounty Cap (USD): $50,000.00

   • Aggregate Bounty Cap (USD): $50,000.00

   • Retainable: False

     1. This means that whitehats cannot retain their bounty directly from the recovered assets. Instead, all rescued funds must be returned to the protocol’s designated asset recovery address, and the bounty will be paid out separately after verification.

   • Identity Verification: Anonymous

     1. Whitehats are allowed to remain anonymous and are not required to provide their legal name or undergo identity verification. This ensures privacy for whitehats while still enabling them to participate in the bounty program and assist during exploits without revealing personal information.

   • Diligence Requirements: None

---

Implementation Plan

1. Register Agreement On-Chain:

   • The agreement will be registered on Ethereum in the Safe Harbor Registry, including all adoptionDetails. This ensures transparency and immutability.

2. Communicate Adoption:

   • An official announcement will be made across all Pareto communication channels, explaining the adoption and its significance to the community.

3. Future Updates to Scope:

   • New versions of Pareto will be reviewed and added to the Safe Harbor Agreement scope via Pareto Governance vote, ensuring continued protection for all new contracts and functionalities.

---

Conclusion

Adopting the SEAL Whitehat Safe Harbor Agreement equips Pareto with a rapid response mechanism for active exploits, enabling whitehats to step in effectively when needed most. The agreement provides clear guidelines for action, increasing the protection of user funds and demonstrating Pareto’s commitment to proactive security.

---

References

• SEAL Whitehat Safe Harbor Agreement: https://github.com/security-alliance/safe-harbor

• Pareto Bug Bounty: Immunefi Bug Bounty