Dead Shares

Dead shares are vault shares minted to a burn address (typically address(0)) on the very first deposit, so they can never be redeemed. By guaranteeing that totalSupply is never a tiny number like 1, dead shares blunt the inflation attack: the attacker can no longer own the only share in existence and therefore cannot single-handedly set the price per share.

Origins and use

The pattern comes from Uniswap V2, which permanently locks the first MINIMUM_LIQUIDITY (1,000) LP tokens on pool creation. ERC-4626 vaults adopt the same idea — Aave's Stata token wrapper uses a variation — by burning a minimum initial mint so no depositor can exploit the empty-vault state.

Limitations

Dead shares reduce but do not fully eliminate attack profitability, and they burn real value that legitimate depositors effectively subsidize. Because the protection scales with the number of dead shares relative to a realistic donation, dead shares are usually combined with a decimal offset and internal balance tracking rather than relied on alone.