Firo Protocol Vulnerability Risks and Potential Exploits

Let me explain how this works with the example of Firo: users who utilize Confidential Transactions (CT) send coins to a pool that aggregates all users' confidential balances into a single basket. If there is an vulnerability in the protocol that allows for the creation of new coins, a malicious actor could gradually withdraw coins from this pool over time, possibly going unnoticed by the community for years. Once the issue is discovered, everyone would rush to withdraw their funds, but they might be unable to do so because the attacker could have already exhausted the withdrawal limits, leading to significant harm. This highlights the importance of strict protocol security and early detection mechanisms to prevent such long-term undetected exploits and protect user funds.