The vulnerability CVE-2026-32129 affects the Poseidon V1 (PoseidonSponge) cryptographic hash function implementation in the stellar rs-soroban-poseidon library, which is used for hashing in Soroban smart contracts. PoseidonSponge processes inputs using a sponge construction with a defined rate parameter T. When the input vector length is less than T - 1, the implementation implicitly zero-fills the remaining rate positions without applying any injective padding scheme. This design flaw causes different input vectors to produce identical pre-permutation states, resulting in trivial hash collisions. For example, hashing [m1, ..., mk] yields the same hash as [m1, ..., mk, 0] if k < T - 1. Such collisions violate the collision resistance property critical to cryptographic hash functions, potentially allowing attackers to substitute or manipulate inputs without detection. The Poseidon2 variant (Poseidon2Sponge) is not vulnerable, indicating that the issue is specific to the Poseidon V1 sponge construction. The vulnerability affects all versions of rs-soroban-poseidon prior to 25.0.1. The CVSS 4.0 score of 8.7 reflects the vulnerability's network exploitability, lack of required privileges or user interaction, and high impact on integrity. No known exploits have been reported in the wild yet, but the flaw poses a significant risk to the security of smart contracts relying on this hash function for integrity guarantees.

This vulnerability undermines the collision resistance of the Poseidon V1 hash function in Soroban smart contracts, potentially allowing attackers to create different inputs that hash to the same value. This can lead to integrity violations in smart contract logic, such as bypassing validation checks, forging signatures, or manipulating contract state transitions. Since Soroban is a smart contract platform on the Stellar blockchain, the impact extends to decentralized applications (dApps) and financial transactions relying on these contracts. Exploitation could result in financial loss, unauthorized asset transfers, or disruption of contract operations. The vulnerability is exploitable remotely without authentication or user interaction, increasing its risk. Organizations using affected versions of rs-soroban-poseidon may face reputational damage, regulatory scrutiny, and operational disruptions if the flaw is exploited. The absence of known exploits currently provides a window for remediation, but the high severity score indicates urgent attention is needed to prevent future attacks.

Organizations should immediately upgrade rs-soroban-poseidon to version 25.0.1 or later, where this vulnerability is addressed. If upgrading is not immediately feasible, developers should avoid using Poseidon V1 (PoseidonSponge) for hashing inputs with lengths less than the sponge rate minus one, or implement explicit injective padding to prevent zero-filling collisions. Reviewing and auditing smart contracts that rely on PoseidonSponge hashing is critical to identify potential misuse or vulnerable code paths. Employing Poseidon2 (Poseidon2Sponge), which is not affected, is recommended as a safer alternative. Additionally, integrating fuzz testing and formal verification for smart contract hashing logic can help detect similar weaknesses. Monitoring blockchain activity for anomalous transactions or hash collisions may provide early warning signs of exploitation attempts. Finally, educating developers about the importance of cryptographic padding and collision resistance in hash functions will reduce the risk of similar vulnerabilities in the future.