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title sponsor slug date findings contest
Vader Protocol contest
Vader Protocol
2021-11-vader
2022-02-10
52

Overview

About C4

Code4rena (C4) is an open organization consisting of security researchers, auditors, developers, and individuals with domain expertise in smart contracts.

A C4 code contest is an event in which community participants, referred to as Wardens, review, audit, or analyze smart contract logic in exchange for a bounty provided by sponsoring projects.

During the code contest outlined in this document, C4 conducted an analysis of Vader Protocol contest smart contract system written in Solidity. The code contest took place between November 9—November 15 2021.

Wardens

29 Wardens contributed reports to the Vader Protocol contest:

  1. TomFrenchBlockchain
  2. cmichel
  3. jayjonah8
  4. rfa
  5. shri4net
  6. xYrYuYx
  7. WatchPug (jtp and ming)
  8. jonah1005
  9. Reigada
  10. defsec
  11. leastwood
  12. gzeon
  13. pauliax
  14. hack3r-0m
  15. hyh
  16. elprofesor
  17. Ruhum
  18. Meta0xNull
  19. ye0lde
  20. pants
  21. pmerkleplant
  22. ksk2345
  23. fatima_naz
  24. nathaniel
  25. mics
  26. 0xean
  27. 0x0x0x
  28. evo5555
  29. m3kk_kn1ght

This contest was judged by Alberto Cuesta Cañada.

Final report assembled by itsmetechjay and CloudEllie.

Summary

The C4 analysis yielded an aggregated total of 98 unique vulnerabilities and 190 total findings. All of the issues presented here are linked back to their original finding.

Of these vulnerabilities, 34 received a risk rating in the category of HIGH severity, 23 received a risk rating in the category of MEDIUM severity, and 41 received a risk rating in the category of LOW severity.

C4 analysis also identified 36 non-critical recommendations and 56 gas optimizations.

Scope

The code under review can be found within the C4 Vader Protocol contest repository, and is composed of 87 smart contracts written in the Solidity programming language and includes 7573 lines of Solidity code and 95 lines of JavaScript.

Severity Criteria

C4 assesses the severity of disclosed vulnerabilities according to a methodology based on OWASP standards.

Vulnerabilities are divided into three primary risk categories: high, medium, and low.

High-level considerations for vulnerabilities span the following key areas when conducting assessments:

  • Malicious Input Handling
  • Escalation of privileges
  • Arithmetic
  • Gas use

Further information regarding the severity criteria referenced throughout the submission review process, please refer to the documentation provided on the C4 website.

High Risk Findings (34)

Submitted by TomFrenchBlockchain, also found by cmichel

Impact

The amount of synths minted / assets received when minting or burning synths can be manipulated to an unlimited extent by manipulating the reserves of the pool

Proof of Concept

See VaderPool.mintSynth: https://github.com/code-423n4/2021-11-vader/blob/607d2b9e253d59c782e921bfc2951184d3f65825/contracts/dex-v2/pool/VaderPoolV2.sol#L126-L167

Here a user sends nativeDeposit to the pool and the equivalent amount of foreignAsset is minted as a synth to be sent to the user. However the user can't specify the minimum amount of synth that they would accept. A frontrunner can then manipulate the reserves of the pool in order to make foreignAsset appear more valuable than it really is so the user receives synths which are worth much less than what nativeDeposit is worth. This is equivalent to a swap without a slippage limit.

Burning synths essentially runs the same process in behalf so manipulating the pool in the opposite direction will result in the user getting fewer of nativeAsset than they expect.

Recommended Mitigation Steps

Add a argument for the minimum amount of synths to mint or nativeAsset to receive.

SamSteinGG (Vader) acknowledged and disagreed with severity:

We believe the severity should be set to medium as there are no loss of funds and its exploit requires special circumstances to be profitable.

Submitted by TomFrenchBlockchain

Impact

Draining of funds from VaderPool

Proof of Concept

See the VaderPool.mintSynth function: https://github.com/code-423n4/2021-11-vader/blob/607d2b9e253d59c782e921bfc2951184d3f65825/contracts/dex-v2/pool/VaderPoolV2.sol#L126-L167

As the pool's reserves can be manipulated through flashloans similar to on UniswapV2, an attacker may set the exchange rate between nativeAsset and synths (calculated from the reserves). An attacker can exploit this to drain funds from the pool.

  1. The attacker first flashloans and sells a huge amount of foreignAsset to the pool. The pool now thinks nativeAsset is extremely valuable.
  2. The attacker now uses a relatively small amount of nativeAsset to mint synths using VaderPool.mintSynth. As the pool thinks nativeAsset is very valuable the attacker will receive a huge amount of synths.
  3. The attacker can now manipulate the pool in the opposite direction by buying up the foreignAsset they sold to the pool. nativeAsset is now back at its normal price, or perhaps artificially low if the attacker wishes.
  4. The attacker now burns all of their synths. As nativeAsset is considered much less valuable than at the point the synths were minted it takes a lot more of nativeAsset in order to pay out for the burned synths.

For the price of a flashloan and some swap fees, the attacker has now managed to extract a large amount of nativeAsset from the pool. This process can be repeated as long as it is profitable.

Recommended Mitigation Steps

Prevent minting of synths or at the very least tie the exchange rate to a manipulation resistant oracle.

Submitted by jayjonah8, also found by rfa, shri4net, and xYrYuYx

Impact

The whitepaper says that the Vader token contains a Fee-On-Transfer so in XVader.sol, an attacker may be able to keep calling enter() and leave() while being credited more tokens than the contract actually receives eventually draining it.

Proof of Concept

  1. Attacker deposits 500 Vader
  2. Attacker receives credit for 500 while the xVader contract gets the 500 - fee.
  3. Attacker calls leave() leaving the contract with a difference of the fee.

Tools Used

Manually code review

Recommended Mitigation Steps

There should be pre and post checks on balances to get the real amount

0xstormtrooper (Vader) acknowledged:

Vader fee on transfer will be removed

Submitted by TomFrenchBlockchain

Impact

Detailed description of the impact of this finding.

Proof of Concept

https://github.com/code-423n4/2021-11-vader/blob/3a43059e33d549f03b021d6b417b7eeba66cf62e/contracts/twap/TwapOracle.sol#L156

On L156 of TwapOracle we perform the calculation:

result = ((sumUSD * IERC20Metadata(token).decimals()) / sumNative);

This seems extremely odd as for an 18 decimal token we're then calculating

result = ((sumUSD * 18) / sumNative);

This is just plain weird. I expect what was meant is to replace this line with the below so we're properly scaling for token's number of decimals.

uint256 scalingFactor = 10 ** IERC20Metadata(token).decimals()
result = (sumUSD * scalingFactor) / sumNative;

Marked as high severity as this exchange rate appears to be used in some form of minting mechanism and correctness of the oracle is listed as one of the key focuses of the audit.

Recommended Mitigation Steps

As above.

SamSteinGG (Vader) confirmed

The TWAP oracle module has been completely removed and redesigned from scratch as LBTwap that is subject of the new audit.

Submitted by TomFrenchBlockchain, also found by WatchPug

Impact

Impermanent loss protection can be exploited to drain the reserve.

Proof of Concept

In VaderPoolV2.burn we calculate the current losses that the LP has made to impermanent loss.

https://github.com/code-423n4/2021-11-vader/blob/3a43059e33d549f03b021d6b417b7eeba66cf62e/contracts/dex-v2/pool/VaderPoolV2.sol#L237-L269

These losses are then refunded to the LP in VADER tokens from the reserve

https://github.com/code-423n4/2021-11-vader/blob/3a43059e33d549f03b021d6b417b7eeba66cf62e/contracts/dex-v2/router/VaderRouterV2.sol#L208-L227

This loss is calculated by the current reserves of the pool so if an LP can manipulate the pool's reserves they can artificially engineer a huge amount of IL in order to qualify for a payout up to the size of their LP position.

https://github.com/code-423n4/2021-11-vader/blob/3a43059e33d549f03b021d6b417b7eeba66cf62e/contracts/dex/math/VaderMath.sol#L73-L93

The attack is then as follows.

  1. Be an LP for a reasonable period of time (IL protection scales linearly up to 100% after a year)
  2. Flashloan a huge amount of one of the pool's assets.
  3. Trade against the pool with the flashloaned funds to unbalance it such that your LP position has huge IL.
  4. Remove your liquidity and receive compensation from the reserve for the IL you have engineered.
  5. Re-add your liquidity back to the pool.
  6. Trade against the pool to bring it back into balance.

The attacker now holds the majority of their flashloaned funds (minus slippage/swap fees) along with a large fraction of the value of their LP position in VADER paid out from the reserve. The value of their LP position is unchanged. Given a large enough LP position, the IL protection funds extracted from the reserve will exceed the funds lost to swap fees and the attacker will be able to repay their flashloan with a profit.

This is a high risk issue as after a year any large LP is incentivised and able to perform this attack.

Recommended Mitigation Steps

Use a manipulation resistant oracle for the relative prices of the pool's assets (TWAP, etc.)

Submitted by TomFrenchBlockchain

Impact

Vader Reserve can be drained of funds.

Proof of Concept

In VaderPoolV2.burn we calculate the current losses that the LP has made to impermanent loss.

https://github.com/code-423n4/2021-11-vader/blob/3a43059e33d549f03b021d6b417b7eeba66cf62e/contracts/dex/pool/VaderPool.sol#L77-L89

These losses are then refunded to the LP in VADER tokens from the reserve. NOTE: This IL protection is paid for ALL token pairs. THIS IS IMPORTANT!

https://github.com/code-423n4/2021-11-vader/blob/3a43059e33d549f03b021d6b417b7eeba66cf62e/contracts/dex/router/VaderRouter.sol#L187-L206

The loss is calculated by the comparing the amounts of each asset initially added to the pool against the amounts of each asset which are removed from the pool. There's an unspoken assumption here that the LP entered the pool at the true price at that point.

https://github.com/code-423n4/2021-11-vader/blob/3a43059e33d549f03b021d6b417b7eeba66cf62e/contracts/dex/math/VaderMath.sol#L73-L93

Crucially we see that if an attacker can cheaply create a pool with a token which starts off with a very low price in terms of VADER and is guaranteed to have a very high price in terms of VADER then they will benefit from a large amount of IL protection funds from the reserve.

An attacker could then perform this attack with the following.

  1. Flashloan a huge amount of Vader (or flashloan + buy VADER).
  2. Deploy a token TKN, which the attacker can mint as much as they like.
  3. Add liquidity to a new pool with a large amount of VADER and a small amount of TKN
  4. Use their ability to mint TKN to buy up all the VADER in their pool
  5. Repay flashloan with VADER extracted from pool + some pre-existing funds as attacker needs to cover VADER lost to swap fees/slippage.

The attacker has now engineered a liquidity position which looks massively underwater due to IL but in reality was very cheap to produce. Nobody else can do anything to this pool except just give the attacker money by buying TKN so this attack can't be prevented. The attacker now just needs to wait for at most a year for the IL protection to tick up and then they can cash in the LP position for a nice payday of up to the amount of VADER they initially added to the pool.

Recommended Mitigation Steps

Add a whitelist to the pairs which qualify for IL protection.

SamSteinGG (Vader) disputed:

Predicting the price fluctuations of an asset is impossible. An attacker cannot create a pool arbitrarily as that is governed by a special whitelist function that is in turn voted on by the DAO.

alcueca (judge) commented:

As we saw in other issues, the creation of pools is permissionless

SamSteinGG (Vader) commented:

@alcueca Again, there seems to be confusion as to the versions utilized. The submitter references the Vader V2 implementation in which pool creations are indeed permissioned (via the add supported token function) as the Vader pool factory is only relevant to the V1 implementation.

Submitted by TomFrenchBlockchain

Impact

All liquidity deployed to one of VaderPool or VaderPoolV2 will be locked permanently.

Proof of Concept

Both VaderRouter and VaderRouterV2 make calls to VaderReserve in order to pay out IL protection.

However VaderReserve only allows a single router to claim IL protection on behalf of users.

https://github.com/code-423n4/2021-11-vader/blob/3a43059e33d549f03b021d6b417b7eeba66cf62e/contracts/reserve/VaderReserve.sol#L80-L83

It's unlikely that the intent is to deploy multiple reserves so there's no way for both VaderRouter and VaderRouterV2 to pay out IL protection simultaneously.

This is a high severity issue as any LPs which are using the router which is not listed on VaderReserve will be unable to remove liquidity as the call to the reserve will revert. Vader governance is unable to update the allowed router on VaderReserve so all liquidity on either VaderPool or VaderPoolV2 will be locked permanently.

Recommended Mitigation Steps

Options:

  1. Allow the reserve to whitelist multiple addresses to claim funds
  2. Allow the call to the reserve to fail without reverting the entire transaction (probably want to make this optional for LPs)

SamSteinGG (Vader) disputed:

As the code indicates, only one of the two versioned instances of the AMM will be deployed and active at any given time rendering this exhibit incorrect.

alcueca (judge) commented:

Sorry @SamSteinGG, where does the code indicate that?

SamSteinGG (Vader) commented:

Correction, this was clarified during the audit in the discord channel.

Submitted by xYrYuYx

Impact

https://github.com/code-423n4/2021-11-vader/blob/main/contracts/twap/TwapOracle.sol#L166

tUSDInUSDV can be smaller than tUSDInVader, and then getRate will return 0. This will lead wrong rate calculation.

Tools Used

Manually

Recommended Mitigation Steps

Multiple enough decimals before division

SamSteinGG (Vader) confirmed

The TWAP oracle module has been completely removed and redesigned from scratch as LBTwap that is subject of the new audit.

Submitted by TomFrenchBlockchain

Impact

The VaderReserve pays out IL from VaderPoolV2 LPs expressed in USDV with VADER (assuming a 1:1 exchange rate)

Proof of Concept

From the TwapOracle, it can be seen that VaderPoolV2 is intended to be deployed with USDV as its nativeAsset:

All the pairs in VaderPoolV2 are then USDV:TKN where TKN is some other token, exactly which is irrelevant in this case.

VaderPoolV2 offers IL protection where any IL is refunded from the VaderReserve

https://github.com/code-423n4/2021-11-vader/blob/3a43059e33d549f03b021d6b417b7eeba66cf62e/contracts/dex-v2/pool/VaderPoolV2.sol#L258-L268

The VaderReserve holds a balance of VADER tokens which will be used to pay out this protection.

https://github.com/code-423n4/2021-11-vader/blob/3a43059e33d549f03b021d6b417b7eeba66cf62e/contracts/reserve/VaderReserve.sol#L76-L90

The IL experienced by the LP is calculated in VaderMath.calculateLoss

https://github.com/code-423n4/2021-11-vader/blob/3a43059e33d549f03b021d6b417b7eeba66cf62e/contracts/dex/math/VaderMath.sol#L73-L93

This is the core of the issue. From the variable names it's clear that this is written with the assumption that it is work on units of VADER whereas it is provided amounts in terms of USDV. Checking VaderRouterV2 we can see that we pass the output of this calculation directly to the reserve in order to claim VADER.

If an LP experienced 100 USDV worth of IL, instead of claiming the equivalent amount of VADER they would receive exactly 100 VADER as there's no handling of the exchange rate between USDV and VADER.

As VADER and USDV are very unlikely to trade at parity LPs could get sustantially more or less than the amount of IL they experienced.

Recommended Mitigation Steps

Add handling for the conversion rate between VADER and USDV using a tamper resistant oracle (TwapOracle could potentially fulfil this role).

SamSteinGG (Vader) confirmed

Submitted by jonah1005

Impact

The VaderPool would compensate users' IL. The formula it uses to calculate lp value is vulnerable to manipulation.

The formula to calculate the lp value is similar to warp finance which is known to be unsafe. warpfinance-incident-root-cause-analysis (Please to refer to the POC section)

The Attacker can purchase an old lp position, manipulate price, take IL compensation and drain the reserve. I consider this is a high-risk issue.

Proof of Concept

VaderMath.sol#L69-L93

The lp value is calculated as [(A0 * P1) + V0] and // [(A1 * P1) + V1]. Assume that there's an ETH pool and there's 100 ETH and 100 Vader in the pool.

  1. Attacker deposit 1 ETH and 1 Vader and own 1% of the liquidity.
  2. Wait 1 year
  3. Start flash loan and buy a lot ETH with 99900 Vader.
  4. There's 0.1 ETH 100,000 Vader in the pool.
  5. Burn 1 % lp at the price 1 ETH = 1,000,000 Vader.
  6. A0 * P1 + V0 = 1 (eth) * 1,000,000 (price) + 100 (vader)
  7. A1 * P1 + V1 = 0.001 (eth) * 1,000,000 (price) + 10,000 (vader)
  8. IL compensation would be around 9891000.

Tools Used

None

Recommended Mitigation Steps

Please use the fair lp pricing formula from alpha finance instead. fair-lp-token-pricing

SamSteinGG (Vader) disputed:

The described attack scenario can not be executed as the pool would actually consume the flash loan. The CLP model follows a non-linear curve that actually diminishes in value as the trade size increases, meaning that at most 25% of the total assets in the pool can be drained at a given iteration. This, on top with the fees of each transaction render this attack vector impossible. Please request a tangible attack test from the warden if this is meant to be accepted as valid.

alcueca (judge) commented:

The CLP model isn't mentioned in the readme or the whitepaper. The issue is valid according to the materials supplied.

SamSteinGG (Vader) commented:

@alcueca As the grading guidelines of C4 state, a documentation issue cannot constitute more than a low risk finding. We advise the severity to be lowered.

Submitted by Reigada

Impact

In the contract BasePool the mint function can be frontrun. This will assign the NFT to the attacker which later on he can burn it retrieving the corresponding \_nativeAsset and \_foreignAsset initially deposited by the frontrun victim. https://github.com/code-423n4/2021-11-vader/blob/main/contracts/dex/pool/BasePool.sol#L149-L194

Proof of Concept

User1 transfers 1000 \_nativeAsset tokens and 1000 \_foreignAsset tokens into the BasePool contract. User1 calls the BasePool.mint() function to retrieve his NFT. Attacker is constantly polling for an increase of the balance of \_nativeAsset and \_foreignAsset of the contract OR attacker is constantly scanning the mempool for mint() function calls. Attacker detects an increase of balance of \_nativeAsset and \_foreignAsset OR attacker detects a mint() function call in the mempool. Attacker frontruns the mint call and retrieves the NFT. Gets a NFT that is worth 1000 \_nativeAssets and 1000 \_foreignAssets. User1 gets a NFT that is worth 0 \_nativeAssets and 0 \_foreignAssets. Attacker burns the NFT retrieving the corresponding \_nativeAsset and \_foreignAsset initially deposited by the victim.

Tools Used

Manual testing

Recommended Mitigation Steps

Include in the mint() function the transfer of \_nativeAssets and \_foreignAssets to the smart contract.

SamSteinGG (Vader) disputed:

The pool is meant to be utilized via the router or smart contracts and is not meant to be utilized directly. The exact same "flaw" exists in Uniswap V2 whereby if you transfer assets directly someone else can claim them on your behalf.

alcueca (judge) commented:

Ah, so this how you prevent direct access to the pools. The issue is valid due to lack of documentation on the usage of the router.

SamSteinGG (Vader) commented:

Firstly, documentation related issues cannot constitute a high risk vulnerability. Secondly, this type of documentation does not exist in Uniswap V2 either. We advise this finding to be set to no risk.

Submitted by jonah1005, also found by defsec

Impact

createPool is a permissionless transaction.

  1. Anyone can create a token pool.
  2. Token price is set by the first lp provider.
  3. User can get a synthetic asset.

Assume a new popular coin that the DAO decides to add to the protocol. The attacker can create the pool and set it to be extremely cheap. (By depositing 1 wei coin and 10^18 wei Vader.) The attacker can mint a lot of synth by providing another 10^18 wei Vader.

There's no way to revoke the pool. The coin pool would be invalid since the attacker can drain all the lp in the pool.

I consider this is a high-risk issue.

Proof of Concept

Tools Used

None

Recommended Mitigation Steps

Restrict users from minting synth from a new and illiquid pool. Some thoughts about the fix:

  1. Decide minimum liquidity for a synthetic asset (e.g 1M Vader in the pool)
  2. Once there's enough liquidity pool, anyone can deploy a synthetic asset after a cool down. (e.g. 3 days

The pool can remain permissionless and safe.

SamSteinGG (Vader) disputed:

This is an invalid finding as creating pools is not a permissionless operation, the token must be in the supported list of assets.

alcueca (judge) commented:

I can't see a check for a token to be in a supported list of assets.

SamSteinGG (Vader) commented:

@alcueca There seems to be some confusion. The submitted of the bounty links the Vader Pool Factory of DEX V1 and the Pool of DEX V2 which are not interacting between them. As such, the finding is invalid.

Submitted by leastwood

Impact

The mintSynth() function is callable by any user and creates a synthetic asset against foreignAsset if it does not already exist. The protocol expects a user to first approve the contract as a spender before calling mintSynth(). However, any arbitrary user could monitor the blockchain for contract approvals that match VaderPoolV2.sol and effectively frontrun their call to mintSynth() by setting the to argument to their own address. As a result, the nativeDeposit amount is transferred from the victim, and a synthetic asset is minted and finally transferred to the malicious user who is represented by the to address.

Proof of Concept

https://github.com/code-423n4/2021-11-vader/blob/main/contracts/dex-v2/pool/VaderPoolV2.sol#L126-L167

Tools Used

Manual code review. Discussions with dev.

Recommended Mitigation Steps

Consider removing the from argument in mintSynth() and update the safeTransferFrom() call to instead transfer from msg.sender.

SamSteinGG (Vader) commented:

The pool contracts, similarly to Uniswap V2, are never meant to be interacted with directly.

Submitted by leastwood

Impact

The mintFungible() function is callable by any user that wishes to mint liquidity pool fungible tokens. The protocol expects a user to first approve the contract as a spender before calling mintFungible(). However, any arbitrary user could monitor the blockchain for contract approvals that match VaderPoolV2.sol and effectively frontrun their call to mintFungible() by setting the to argument to their own address. As a result, the nativeDeposit and foreignDeposit amounts are transferred from the victim, and LP tokens are minted and finally transferred to the malicious user who is represented by the to address.

Proof of Concept

https://github.com/code-423n4/2021-11-vader/blob/main/contracts/dex-v2/pool/VaderPoolV2.sol#L284-L335

Tools Used

Manual code review. Discussions with dev.

Recommended Mitigation Steps

Consider removing the from argument in mintFungible() and update the safeTransferFrom() calls to instead transfer from msg.sender.

SamSteinGG (Vader) disputed:

The pool contracts, similarly to Uniswap V2, are never meant to be interacted with directly.

alcueca (judge) commented:

You need to enforce that somehow.

SamSteinGG (Vader) confirmed:

Upon second consideration, the functions relating to the minting of synths and wrapped tokens should have had the onlyRouter modifier and thus are indeed vulnerable. Issue accepted.

Submitted by cmichel

The 3-path hop in VaderRouter._swap is supposed to first swap foreign assets to native assets, and then the received native assets to different foreign assets again.

The pool.swap(nativeAmountIn, foreignAmountIn) accepts the foreign amount as the second argument. The code however mixes these positional arguments up and tries to perform a pool0 foreign -> native swap by using the foreign amount as the native amount:

function _swap(
    uint256 amountIn,
    address[] calldata path,
    address to
) private returns (uint256 amountOut) {
    if (path.length == 3) {
      // ...
      // @audit calls this with nativeAmountIn = amountIn. but should be foreignAmountIn (second arg)
      return pool1.swap(0, pool0.swap(amountIn, 0, address(pool1)), to);
    }
}

// @audit should be this instead
return pool1.swap(pool0.swap(0, amountIn, address(pool1)), 0, to);

Impact

All 3-path swaps through the VaderRouter fail in the pool check when require(nativeAmountIn = amountIn <= nativeBalance - nativeReserve = 0) is checked, as foreign amount is sent but native amount is specified.

Recommended Mitigation Steps

Use return pool1.swap(pool0.swap(0, amountIn, address(pool1)), 0, to); instead.

SamSteinGG (sponsor) confirmed

Submitted by cmichel

The 3-path hop in VaderRouter.calculateOutGivenIn is supposed to first swap foreign assets to native assets in pool0, and then the received native assets to different foreign assets again in pool1.

The first argument of VaderMath.calculateSwap(amountIn, reserveIn, reserveOut) must refer to the same token as the second argument reserveIn. The code however mixes these positions up and first performs a swap in pool1 instead of pool0:

function calculateOutGivenIn(uint256 amountIn, address[] calldata path)
    external
    view
    returns (uint256 amountOut)
{
  if(...) {
  } else {
    return
        VaderMath.calculateSwap(
            VaderMath.calculateSwap(
                // @audit the inner trade should not be in pool1 for a forward swap. amountIn foreign => next param should be foreignReserve0
                amountIn,
                nativeReserve1,
                foreignReserve1
            ),
            foreignReserve0,
            nativeReserve0
        );
  }

 /** @audit instead should first be trading in pool0!
    VaderMath.calculateSwap(
        VaderMath.calculateSwap(
            amountIn,
            foreignReserve0,
            nativeReserve0
        ),
        nativeReserve1,
        foreignReserve1
    );
  */

Impact

All 3-path swaps computations through VaderRouter.calculateOutGivenIn will return the wrong result. Smart contracts or off-chain scripts/frontends that rely on this value to trade will have their transaction reverted, or in the worst case lose funds.

Recommended Mitigation Steps

Return the following code instead which first trades in pool0 and then in pool1:

return
  VaderMath.calculateSwap(
      VaderMath.calculateSwap(
          amountIn,
          foreignReserve0,
          nativeReserve0
      ),
      nativeReserve1,
      foreignReserve1
  );

SamSteinGG (Vader) confirmed

Submitted by cmichel

The TWAPOracle.registerPair function takes in a factory and (token0, token1). The function accepts a _factory argument which means any Uniswap-like factory can be used.

When using the actual Uniswap factory's IUniswapV2Factory(factory).getPair(token0, token1) call, it could be that the token0 and token1 are reversed as it ignores the order.

Meaning, the price0/1CumulativeLast could also be reversed as it matches the internal order. The code however pushes the _pairs assuming that the internal price0CumulativeLast, price1CumulativeLast order matches the order of the function arguments token0, token1.

_pairs.push(
    PairData({
        pair: pairAddr,
        token0: token0,
        token1: token1,
        price0CumulativeLast: price0CumulativeLast,
        price1CumulativeLast: price1CumulativeLast,
        blockTimestampLast: blockTimestampLast,
        price0Average: FixedPoint.uq112x112({_x: 0}),
        price1Average: FixedPoint.uq112x112({_x: 0})
    })
);

Impact

The prices could be inverted which leads to the oracle providing wrong prices.

Recommended Mitigation Steps

It should be checked if Uniswap's internal order matches the order of the token0/1 function arguments. If not, the cumulative prices must be swapped.

// pseudocode
IUniswapV2Pair pair = IUniswapV2Pair(
    IUniswapV2Factory(factory).getPair(token0, token1)
);
pairAddr = address(pair);
price0CumulativeLast = pair.price0CumulativeLast();
price1CumulativeLast = pair.price1CumulativeLast();
(price0CumulativeLast, price1CumulativeLast) = token0 == pair.token0() ? (price0CumulativeLast, price1CumulativeLast) : (price1CumulativeLast, price0CumulativeLast);

The same issue exists in update

SamSteinGG (Vader) confirmed

The TWAP oracle module has been completely removed and redesigned from scratch as LBTwap that is subject of the new audit.

Submitted by gzeon

Impact

Vader reimburse user IL immediately when user withdraw from the pool (VaderRouterV2.sol:L227), an attacker can therefore manipulate the pool balance causing a high IL, remove liquidity and restore the pool balance such that he will receive a larger IL reimbursement.

Proof of Concept

Let's assume our attacker own 100% of FOO-VADER

  1. Attacker add 100 FOO and 100 VADER to the Pool
  2. wait some block, or 1 year for max IL protection
  3. In 1 transaction, attacker
    • Swap 9900 FOO to 99 Vader
    • Pool now have 10000 FOO and 1 VADER
    • By VaderMath.sol:L84 the loss is 100*1/10000+100-2 = 98.01 VADER
    • Remove liquidity and receive 10000 FOO and 99.01 VADER
    • Restore the pool balance
  4. Such that the attacker will gain 98.01 VADER without risk

The profit is constrained by gas cost, pool fee, % of pool controlled by the attacker and % of IL protection.

Recommended Mitigation Steps

Use twap price to determine P1 in VaderMath.sol:L84 when calculating IL to reduce risk of manipulation

SamSteinGG (Vader) commented:

Duplicate of #2

alcueca (judge) commented:

Doesn't seem like a duplicate to me, @SamSteinGG?

SamSteinGG (Vader) commented:

@alcueca The stated trade cannot occur as trades are inherently limited by the CLP design of the protocol to one third of the available pair liquidity. As such, the illustrated pair would actually result in almost zero units retrieved back.

Submitted by gzeon

Impact

Since veto ensure none of the actions in proposal being vetoed point to the contract (GovernorAlpha.sol:L562), a malicious proposal can be designed to have an action that point to governance and therefore effectively cannot be vetoed.

Proof of Concept

For any attacker who want to launch a governance attack using a malicious proposal, they simply need to add an action that point to governance that does nothing (or anything).

Recommended Mitigation Steps

Some other design can be proposal are vetoable whenever the differential is less than x%, even if it involves governance change, s.t. council can veto most malicious proposal while it is still possible to change council given high enough vote differential.

SamSteinGG (Vader) commented:

Duplicate of #61

alcueca (judge) commented:

Not a duplicate

Submitted by WatchPug

https://github.com/code-423n4/2021-11-vader/blob/429970427b4dc65e37808d7116b9de27e395ce0c/contracts/dex/pool/BasePool.sol#L161-L163

uint256 totalLiquidityUnits = totalSupply;
if (totalLiquidityUnits == 0)
    liquidity = nativeDeposit; // TODO: Contact ThorChain on proper approach

In the current implementation, the first liquidity takes the nativeDeposit amount and uses it directly.

However, since this number (totalLiquidityUnits) will later be used for computing the liquidity issued for future addLiquidity using calculateLiquidityUnits.

A malicious user can add liquidity with only 1 wei USDV and making it nearly impossible for future users to add liquidity to the pool.

Recommendation

Uni v2 solved this problem by sending the first 1000 tokens to the zero address.

The same should work here, i.e., on first mint (totalLiquidityUnits == 0), lock some of the first minter's tokens by minting ~1% of the initial amount to the zero address instead of to the first minter.

SamSteinGG (Vader) commented:

Duplicate of #24

alcueca (judge) commented:

Not a duplicate

Submitted by WatchPug

https://github.com/code-423n4/2021-11-vader/blob/429970427b4dc65e37808d7116b9de27e395ce0c/contracts/dex-v2/pool/VaderPoolV2.sol#L284-L335

function mintFungible(
        IERC20 foreignAsset,
        uint256 nativeDeposit,
        uint256 foreignDeposit,
        address from,
        address to
    ) external override nonReentrant returns (uint256 liquidity) {
        IERC20Extended lp = wrapper.tokens(foreignAsset);

        require(
            lp != IERC20Extended(_ZERO_ADDRESS),
            "VaderPoolV2::mintFungible: Unsupported Token"
        );

        (uint112 reserveNative, uint112 reserveForeign, ) = getReserves(
            foreignAsset
        ); // gas savings

        nativeAsset.safeTransferFrom(from, address(this), nativeDeposit);
        foreignAsset.safeTransferFrom(from, address(this), foreignDeposit);

        PairInfo storage pair = pairInfo[foreignAsset];
        uint256 totalLiquidityUnits = pair.totalSupply;
        if (totalLiquidityUnits == 0) liquidity = nativeDeposit;
        else
            liquidity = VaderMath.calculateLiquidityUnits(
                nativeDeposit,
                reserveNative,
                foreignDeposit,
                reserveForeign,
                totalLiquidityUnits
            );

        require(
            liquidity > 0,
            "VaderPoolV2::mintFungible: Insufficient Liquidity Provided"
        );

        pair.totalSupply = totalLiquidityUnits + liquidity;

        _update(
            foreignAsset,
            reserveNative + nativeDeposit,
            reserveForeign + foreignDeposit,
            reserveNative,
            reserveForeign
        );

        lp.mint(to, liquidity);

        emit Mint(from, to, nativeDeposit, foreignDeposit);
    }

https://github.com/code-423n4/2021-11-vader/blob/429970427b4dc65e37808d7116b9de27e395ce0c/contracts/dex-v2/pool/VaderPoolV2.sol#L126-L167

Funds are transferred from the from parameter, and the output tokens are transferred to the to parameter, both passed by the caller without proper access control.

Impact

This issue allows anyone to call mintFungible() and mintSynth() and steal almost all their wallet balances for all the users who have approved the contract before.

SamSteinGG (Vader) commented:

Duplicate #67

alcueca (judge) commented:

Not a duplicate.

SamSteinGG (Vader) commented:

@alcueca Can you elaborate as to why it is not a duplicate?

Submitted by WatchPug

Given that mintSynth() and burnSynth() will issue and redeem assets based on the price of the pool (reserves), and they will create price impact based on the volume being minted and burnt.

However, the current implementation provides no parameter for slippage control, making them vulnerable to front-run attacks. Especially for transactions with rather large volumes.

Recommendation

Consider adding a minAmountOut parameter.

Submitted by WatchPug

Per the document:

It also is capable of using liquidity units as collateral for synthetic assets, of which it will always have guaranteed redemption liquidity for.

However, in the current implementation, Synth tokens are minted based on the calculation result. While nativeDeposit be added to the reserve, reserveForeign will remain unchanged, not deducted nor locked.

Making it possible for Synth tokens to get over-minted.

Proof of Concept
  • The Vader pool for BTC-USDV is newly created, with nearly 0 liquidity.
  1. Alice add liquidity with 100,000 USDV and 1 BTC;
  2. Bob mintSynth() with 100,000 USDV, got 0.25 BTC vSynth;
  3. Alice remove all the liquidity received at step 1, got all the 200k USDV and 1 BTC.

The 0.25 BTC vSynth held by Bob is now backed by nothing and unable to be redeemed.

This also makes it possible for a sophisticated attacker to steal funds from the Vader pool.

The attacker may do the following in one transaction:

  1. Add liquidity with 10 USDV and 10,000 BTC (flash loan);
  2. Call mintSynth() with 10 USDV, repeat for 10 times, got 1461 BTC vSynth;
  3. Remove liquidity and repay flash loan, keep the 1461 BTC vSynth;
  4. Wait for other users to add liquidity and when the BTC reserve is sufficient, call burnSynth() to steal USDV from the pool.

SamSteinGG (Vader) confirmed

Given that the codebase attempts to implement the Thorchain rust code in a one-to-one fashion, findings that relate to the mathematical accuracy of the codebase will only be accepted in one of the following cases:

  • The code deviates from the Thorchain implementation
  • A test case is created that illustrates the problem

While intuition is a valid ground for novel implementations, we have re-implemented a battle-tested implementation in another language and as such it is considered secure by design unless proven otherwise.

Submitted by WatchPug

The current design/implementation of Vader pool allows users to addLiquidity using arbitrary amounts instead of a fixed ratio of amounts in comparison to Uni v2.

We believe this design is flawed and it essentially allows anyone to manipulate the price of the pool easily and create an arbitrage opportunity at the cost of all other liquidity providers.

An attacker can exploit this by adding liquidity in extreme amounts and drain the funds from the pool.

https://github.com/code-423n4/2021-11-vader/blob/429970427b4dc65e37808d7116b9de27e395ce0c/contracts/dex-v2/pool/VaderPoolV2.sol#L284-L335

function mintFungible(
    IERC20 foreignAsset,
    uint256 nativeDeposit,
    uint256 foreignDeposit,
    address from,
    address to
) external override nonReentrant returns (uint256 liquidity) {
    IERC20Extended lp = wrapper.tokens(foreignAsset);

    require(
        lp != IERC20Extended(_ZERO_ADDRESS),
        "VaderPoolV2::mintFungible: Unsupported Token"
    );

    (uint112 reserveNative, uint112 reserveForeign, ) = getReserves(
        foreignAsset
    ); // gas savings

    nativeAsset.safeTransferFrom(from, address(this), nativeDeposit);
    foreignAsset.safeTransferFrom(from, address(this), foreignDeposit);

    PairInfo storage pair = pairInfo[foreignAsset];
    uint256 totalLiquidityUnits = pair.totalSupply;
    if (totalLiquidityUnits == 0) liquidity = nativeDeposit;
    else
        liquidity = VaderMath.calculateLiquidityUnits(
            nativeDeposit,
            reserveNative,
            foreignDeposit,
            reserveForeign,
            totalLiquidityUnits
        );

    require(
        liquidity > 0,
        "VaderPoolV2::mintFungible: Insufficient Liquidity Provided"
    );

    pair.totalSupply = totalLiquidityUnits + liquidity;

    _update(
        foreignAsset,
        reserveNative + nativeDeposit,
        reserveForeign + foreignDeposit,
        reserveNative,
        reserveForeign
    );

    lp.mint(to, liquidity);

    emit Mint(from, to, nativeDeposit, foreignDeposit);
}
Proof of Concept

Given:

  • A Vader pool with 100,000 USDV and 1 BTC;
  • The totalPoolUnits is 100.

The attacker can do the following in one transaction:

  1. Add liquidity with 100,000 USDV and 0 BTC, get 50 liquidityUnits, representing 1/3 shares of the pool;
  2. Swap 0.1 BTC to USDV, repeat for 5 times; spent0.5 BTC and got 62163.36 USDV;
  3. Remove liquidity, get back 45945.54 USDV and 0.5 BTC; profit for: 62163.36 + 45945.54 - 100000 = 8108.9 USDV.

SamSteinGG (Vader) disputed:

This is the intended design of the Thorchain CLP model. Can the warden provide a tangible attack vector in the form of a test?

alcueca (judge) commented:

Sponsor is acknowledging the issue.

SamSteinGG (Vader) commented:

@alcueca We do not acknowledge the issue. This is the intended design of the CLP model and the amount supplied for a trade is meant to be safeguarded off-chain. It is an inherent trait of the model.

Submitted by WatchPug

The current formula to calculate the amountOut for a swap is:

https://github.com/code-423n4/2021-11-vader/blob/429970427b4dc65e37808d7116b9de27e395ce0c/contracts/dex/math/VaderMath.sol#L99-L111

function calculateSwap(
    uint256 amountIn,
    uint256 reserveIn,
    uint256 reserveOut
) public pure returns (uint256 amountOut) {
    // x * Y * X
    uint256 numerator = amountIn * reserveIn * reserveOut;

    // (x + X) ^ 2
    uint256 denominator = pow(amountIn + reserveIn);

    amountOut = numerator / denominator;
}

We believe the design (the formula) is wrong and it will result in unexpected and unfavorable outputs.

Specifically, if the amountIn is larger than the reserveIn, the amountOut starts to decrease.

Proof of Concept

Given:

  • A USDV-BTC Vader pool with the reserves of 200,000 USDV and 2 BTC.
  1. If Alice swap 2 BTC for USDV, will get 50000 USDV as output;
  2. If Bob swap 2.1 BTC for USDV, will only get 49970.25 USDV as output;
  3. If Carol swap 2.2 BTC for USDV, will only get 49886.62 USDV as output.

For the same pool reserves, paying more for less output token is unexpected and unfavorable.

SamSteinGG (Vader) disputed:

This is the intended design of the Thorchain CLP model. Can the warden provide a tangible attack vector in the form of a test?

alcueca (judge) commented:

It is true that the effect will be surprising to the user, and the issue is acknowledged by the sponsor.

SamSteinGG (Vader) commented:

@alcueca We do not acknowledge the issue. This is the intended design of the CLP model and the amount supplied for a trade is meant to be safeguarded off-chain. It is an inherent trait of the model.

Submitted by TomFrenchBlockchain, also found by cmichel

Impact

Total loss of funds which have been approved on VaderPoolV2

Proof of Concept

VaderPoolV2 allows minting of fungible LP tokens with the mintFungible function

https://github.com/code-423n4/2021-11-vader/blob/607d2b9e253d59c782e921bfc2951184d3f65825/contracts/dex-v2/pool/VaderPoolV2.sol#L284-L290

Crucially this function allows a user supplied value for from which specifies where the nativeAsset and foreignAsset should be pulled from. An attacker can then provide any address which has a token approval onto VaderPoolV2 and mint themselves LP tokens - stealing the underlying tokens.

Recommended Mitigation Steps

Remove from argument and use msg.sender instead.

SamSteinGG (Vader) disputed):

pool is not meant to be interacted with

alcueca (judge) commented:

And how are you going to ensure that the pool is not interacted with, @SamSteinGG?

SamSteinGG (Vader) confirmed:

@alcueca Upon second consideration, the functions relating to the minting of synths and wrapped tokens should have had the onlyRouter modifier and thus are indeed vulnerable. Issue accepted.

Submitted by pauliax, also found by hack3r-0m

Impact

Anyone can call function vestFor and block any user with a tiny amount of Vader. This function has no auth checks so a malicious actor can front-run legit vestFor calls with insignificant amounts. This function locks the user for 365 days and does not allow updating the value, thus forbids legit conversions.

Recommended Mitigation Steps

Consider introducing a whitelist of callers that can vest on behalf of others (e.g. Converter).

SamSteinGG (Vader) confirmed

Submitted by leastwood

Impact

The TwapOracle.consult() function iterates over all token pairs which belong to either VADER or USDV` and then calculates the price of the respective asset by using both UniswapV2 and Chainlink price data. This helps to further protect against price manipulation attacks as the price is averaged out over the various registered token pairs.

Let's say we wanted to query the price of USDV, we would sum up any token pair where USDV == pairData.token0.

The sum consists of the following:

  • Price of USDV denominated in terms of token1 (USDV/token1).
  • Price of token1 denominated in terms of USD (token1/USD).

Consider the following example:

  • SUSHI is the only registered token pair that exists alongside USDV.
  • Hence, calculating sumNative gives us an exchange rate that is denominated as USDV/SUSHI.
  • Similarly, sumUSD gives us the following denominated pair, SUSHI/USD.
  • I'd expect the result to equal sumUSD * token.decimals() * sumNative which should give us a USDV/USD denominated result.

However, the protocol calculates it as (sumUSD * token.decimals()) / sumNative which gives us a SUSHI^2 / (USD*USDV) denominated result. This seems incorrect.

I'd classify this issue as high risk as the oracle returns false results upon being consulted. This can lead to issues in other areas of the protocol that use this data in performing sensitive actions.

Proof of Concept

https://github.com/code-423n4/2021-11-vader/blob/main/contracts/twap/TwapOracle.sol#L115-L157

Similar working implementation listed below:

Tools Used

Manual code review.

Recommended Mitigation Steps

To calculate the correct consultation of a given token, the result should return sumUSD * token.decimals() * sumNative instead to ensure the target token to consult is denominated in USD and contains the correct number of decimals.

SamSteinGG (Vader) confirmed:

The description seems slightly incorrect as it uses a power where multiplication is performed but the general idea is correct.

Submitted by TomFrenchBlockchain

Impact

Frontrunners can extract up to 100% of the value provided by LPs to VaderPoolV2.

Proof of Concept

Users can provide liquidity to VaderPoolV2 through the mintFungible function.

https://github.com/code-423n4/2021-11-vader/blob/429970427b4dc65e37808d7116b9de27e395ce0c/contracts/dex-v2/pool/VaderPoolV2.sol#L271-L335

This allows users to provide tokens in any ratio and the pool will calculate what fraction of the value in the pool this makes up and mint the corresponding amount of liquidity units as an ERC20.

However there's no way for users to specify the minimum number of liquidity units they will accept. As the number of liquidity units minted is calculated from the current reserves, this allows frontrunners to manipulate the pool's reserves in such a way that the LP receives fewer liquidity units than they should. e.g. LP provides a lot of nativeAsset but very little foreignAsset, the frontrunner can then sell a lot of nativeAsset to the pool to devalue it.

Once this is done the attacker returns the pool's reserves back to normal and pockets a fraction of the value which the LP meant to provide as liqudity.

Recommended Mitigation Steps

Add a user-specified minimum amount of LP tokens to mint.

SamSteinGG (Vader) confirmed

Given that the codebase attempts to implement the Thorchain rust code in a one-to-one fashion, findings that relate to the mathematical accuracy of the codebase will only be accepted in one of the following cases:

  • The code deviates from the Thorchain implementation
  • A test case is created that illustrates the problem

While intuition is a valid ground for novel implementations, we have re-implemented a battle-tested implementation in another language and as such it is considered secure by design unless proven otherwise.

An additional note on this point is that any behaviour that the Thorchain model applies is expected to be the intended design in our protocol as well.

An important example is the slippage a user incurs on joining a particular LP pool for which there is no check as there can't be any. Enforcing an LP unit based check here is meaningless given that LP units represent a share that greatly fluctuates (1 unit of LP out of 100 units is different than 1 out of 1000, however, a slippage check for 100 units of DAI for example is valid).

Submitted by leastwood

Impact

The TwapOracle.consult() function iterates over all token pairs which belong to either VADER or USDV` and then calculates the price of the respective asset by using both UniswapV2 and Chainlink price data. This helps to further protect against price manipulation attacks as the price is averaged out over the various registered token pairs.

If a new asset is added by first registering the token pair and aggregator, the consultation result for that token pair will remain skewed until the next update interval. This is due to the fact that the native asset amount will return 0 due to the default price1Average value being used. However, the Chainlink oracle will return a valid result. As a result, the query will be skewed in favour of sumUSD resulting in incorrect consultations.

I'd classify this issue as high risk as the oracle returns false results upon being consulted. This can lead to issues in other areas of the protocol that use this data in performing sensitive actions.

Proof of Concept

Tools Used

Manual code review.

Recommended Mitigation Steps

Consider performing proper checks to ensure that if pairData.price1Average._x == 0, then the Chainlink aggregator is not queried and not added to sumUSD. Additionally, it may be useful to fix the current check to assert that the pairData.price1Average.mul(1).decode144() result is not 0, found here. require(sumNative != 0) is used to assert this, however, this should be require(pairData.price1Average.mul(1).decode144() != 0) instead.

SamSteinGG (Vader) confirmed

The TWAP oracle module has been completely removed and redesigned from scratch as LBTwap that is subject of the new audit.

Submitted by pauliax, also found by TomFrenchBlockchain

Impact

Unused slippage params. function addLiquidity in VaderRouter (both V1 and V2) do not use slippage parameters:

 uint256, // amountAMin = unused
 uint256, // amountBMin = unused

making it susceptible to sandwich attacks / MEV. For a more detailed explanation, see: code-423n4/2021-09-bvecvx-findings#57

Recommended Mitigation Steps

Consider paying some attention to the slippage to reduce possible manipulation attacks from mempool snipers.

SamSteinGG (Vader) disputed:

Slippage checks are impossible in the Thorchain CLP model.

alcueca (judge) commented:

Taking as main over #1 as it is a more general issue, but refer to #1 for a more detailed description and justification for the severity rating.

Submitted by hyh

Impact

Pool funds will be siphoned out over time as swaps and asymmetric LP provision are balancing each other economically, while with introduction of IL reimbursement a malicious user can profit immediately from out of balance pool with a swap and profit again from IL coverage. This requires locking liquidity to a pool, but still represents an additional profit without additional risk at expense of reserve funds.

Another variant of exploiting this is to add liquidity in two steps: deposit 1 with 0 slip adjustment, perfectly matching current market price, deposit 2 with more Vader than market price suggests, moving pool out of balance with Vader becoming cheaper, then exiting deposit 1 with profit because slip adjustment reduce deposit 2's share issuance and deposit 1's now has more asset claims than before. Deposit 2 then need to wait and exit after some time.

IL is calculated as ((originalAsset * releasedVader) / releasedAsset) + originalVader - ((releasedAsset * releasedVader) / releasedAsset) + releasedVader , i.e. original deposit values without taking account of slip adjustment are used, so providing more Vader in deposit 2 leads to greater IL, which this way have 2 parts: market movements related and skewed liquidity provision related. IL covering compensates for slip adjustments this way.

Proof of Concept

The steps to reproduce are:

  1. add asymmetric LP via mint (with NFT),
  2. either swap gathering profit from pool skew or do symmetric deposit beforehand and exit it now
  3. wait for some period for IL protection to be enabled, then withdraw, having IL covered by reserve fund

Router addLiquidity: https://github.com/code-423n4/2021-11-vader/blob/main/contracts/dex-v2/router/VaderRouterV2.sol#L114

NFT mint: https://github.com/code-423n4/2021-11-vader/blob/main/contracts/dex-v2/pool/BasePoolV2.sol#L168

Router removeLiquidity: https://github.com/code-423n4/2021-11-vader/blob/main/contracts/dex-v2/router/VaderRouterV2.sol#L227

NFT burn: https://github.com/code-423n4/2021-11-vader/blob/main/contracts/dex-v2/pool/VaderPoolV2.sol#L237

IL calculation: https://github.com/code-423n4/2021-11-vader/blob/main/contracts/dex/math/VaderMath.sol#L73

Recommended Mitigation Steps

Asymmetric liquidity provision doesn't provide much business value, introducing substantial attack surface, so the core recommendation here is to remove a possibility to add liquidity asymmetrically: instead of penalizing LP with slip adjustment do biggest liquidity addition with 0 slip adjustment that user provided funds allow, and return the remaining part.

This will also guard against cases when user added liquidity with big slip adjustment penalty without malicious intent, not realizing that this penalty will take place, an effect that poses reputational risk to any project using the approach.

Allowing only symmetric liquidity addition removes the described attack surface.

SamSteinGG (Vader) marked as duplicate

alcueca (judge) commented:

Duplicate of which other issue, @SamSteinGG?

Submitted by hyh

Impact

Users that mint Synths do not get pool shares, so exiting of normal LP can lead to their losses as no funds can be left for retrieval.

Proof of Concept

3 types of mint/burn: NFT, Fungible and Synths. Synths are most vilnerable as they do not have share: LP own the pool, so Synth's funds are lost in scenarios similar to:

  1. LP deposit both sides to a pool
  2. Synth deposit and mint a Synth
  3. LP withdraws all as she owns all the pool liquidity, even when provided only part of it
  4. Synth can't withdraw as no assets left

burn NFT LP: https://github.com/code-423n4/2021-11-vader/blob/main/contracts/dex-v2/pool/BasePoolV2.sol#L270

burn fungible LP: https://github.com/code-423n4/2021-11-vader/blob/main/contracts/dex-v2/pool/VaderPoolV2.sol#L374

Recommended Mitigation Steps

Take into account liquidity that was provided by Synth minting.

SamSteinGG (Vader) confirmed

Submitted by leastwood

Impact

The TwapOracle.consult() function iterates over all token pairs which belong to either VADER or USDV` and then calculates the price of the respective asset by using both UniswapV2 and Chainlink price data. This helps to further protect against price manipulation attacks as the price is averaged out over the various registered token pairs.

Let's say we wanted to query the price of USDV, we would sum up any token pair where USDV == pairData.token0.

The sum consists of the following:

  • Price of USDV denominated in terms of token1 (USDV/token1).
  • Price of token1 denominated in terms of USD (token1/USD).

Consider the following example:

  • SUSHI and UNISWAP are the only registered token pairs that exist alongside USDV.
  • Hence, calculating sumNative gives us an exchange rate that is denominated as the sum of USDV/SUSHI and USDV/UNISWAP.
  • Similarly, sumUSD gives us the following denominated pairs, SUSHI/USD and UNISWAP/USD.
  • Summing sumUSD and sumNative produces an entirely incorrect result as compared to multiplying the two results first and then summing.
  • The issue is equivalent to the same issue as performing (p1 + p2)*(q1 + q2) as compared to (p1*q1 + p2*q2). Obviously, these two results are not equivalent, however, the consult() function treats them as such.
  • If we multiply the native price and Chainlink oracle results, then we can correctly calculate the price as such; (SUSHI/USD * USDV/SUSHI + UNISWAP/USD * USDV/UNISWAP) / 2, which should correctly give us the correct denomination and average price.

However, the protocol calculates it as ((SUSHI/USD + UNISWAP/USD) * token.decimals()) / (USDV/SUSHI + USDV/UNISWAP) which gives us an incorrectly denominated result.

I'd classify this issue as high risk as the oracle returns false results upon being consulted. This can lead to issues in other areas of the protocol that use this data in performing sensitive actions.

Proof of Concept

https://github.com/code-423n4/2021-11-vader/blob/main/contracts/twap/TwapOracle.sol#L115-L157

Similar working implementation listed below:

Tools Used

Manual code review.

Recommended Mitigation Steps

To calculate the correct consultation of a given token, the returned result should consist of a sum of priceUSD * token.decimals() * priceNative divided by the number of calculations. This should correctly take the average token pair price.

The following snippet of code details the relevant fix:

    function consult(address token) public view returns (uint256 result) {
        uint256 pairCount = _pairs.length;

        for (uint256 i = 0; i < pairCount; i++) {
            PairData memory pairData = _pairs[i];

            if (token == pairData.token0) {
                //
                // TODO - Review:
                //   Verify price1Average is amount of USDV against 1 unit of token1
                //

                priceNative = pairData.price1Average.mul(1).decode144(); // native asset amount
                if (pairData.price1Average._x != 0) {
                    require(priceNative != 0);
                } else {
                    continue; // should skip newly registered assets that have not been updated yet.
                }

                (
                    uint80 roundID,
                    int256 price,
                    ,
                    ,
                    uint80 answeredInRound
                ) = AggregatorV3Interface(_aggregators[pairData.token1])
                        .latestRoundData();

                require(
                    answeredInRound >= roundID,
                    "TwapOracle::consult: stale chainlink price"
                );
                require(
                    price != 0,
                    "TwapOracle::consult: chainlink malfunction"
                );
                priceUSD = uint256(price) * (10**10);
                result += ((priceUSD * IERC20Metadata(token).decimals()) * priceNative);
            }
        }
        require(sumNative != 0, "TwapOracle::consult: Sum of native is zero");
        return result;
    }

SamSteinGG (Vader) confirmed

The TWAP oracle module has been completely removed and redesigned from scratch as LBTwap that is subject of the new audit.

Medium Risk Findings (23)

Submitted by TomFrenchBlockchain, also found by pauliax

Impact

Loss of ability of TwapOracle to update should too many pools be added.

Proof of Concept

TwapOracle allows an unlimited number of pairs to be added and has no way of removing pairs after the fact. At the same time TwapOracle.update iterates through all pairs in order to update value for each pair.

https://github.com/code-423n4/2021-11-vader/blob/3a43059e33d549f03b021d6b417b7eeba66cf62e/contracts/twap/TwapOracle.sol#L322-L369

TwapOracle.registerPair is a permissioned function so that only the owner can add new pairs however should the owner account be compromised or not mindful of the number of pairs being added it is possible to put the oracle into a state in which it is unable to update. The oracle cannot recover from this state.

Recommended Mitigation Steps

Possible options:

  • Add a method to stop tracking a particular pair
  • Allow updating a subset of all pairs at a time.

SamSteinGG (Vader) disagreed with severity:

The severity of the finding should be reduced as it relies on ill behavior from its owner which is a multisignature address.

alcueca (judge) commented:

The severity rating is valid since the signers might not be aware of the limitation, or the limitation might be reached by natural means.

SamSteinGG (Vader) commented:

The TWAP oracle module has been completely removed and redesigned from scratch as LBTwap that is subject of the new audit.

Submitted by TomFrenchBlockchain

Impact

Inability to call consult on the TwapOracle and so calculate the exchange rate between USDV and VADER.

Proof of Concept

Should any of the Chainlink aggregators used by the TwapOracle becomes stuck in such a state that the check on L143-146 of TwapOracle.sol consistently fails (through a botched upgrade, etc.) then the consult function will always revert.

https://github.com/code-423n4/2021-11-vader/blob/3a43059e33d549f03b021d6b417b7eeba66cf62e/contracts/twap/TwapOracle.sol#L143-L146

There is no method to update the address of the aggregator to use so the TwapOracle will be irrecoverable.

Recommended Mitigation Steps

Allow governance to update the aggregator for a pair (ideally with a timelock.)

SamSteinGG (Vader) diagreed with severity:

The scenario of a Chainlink oracle ceasing function is very unlikely and would cause widespread issues in the DeFi space as a whole.

alcueca (judge) commented:

I'm going to maintain the severity 2 rating despite the low probability of a Chainlink aggregator being permanently disabled. The risk exists, and in general third-party dependencies should be treated with respect in code and documentation.

SamSteinGG (Vader) commented:

The TWAP oracle module has been completely removed and redesigned from scratch as LBTwap that is subject of the new audit.

Submitted by TomFrenchBlockchain

Impact

Potentially frozen or purposefully inaccurate USDV:VADER price feed.

Proof of Concept

https://github.com/code-423n4/2021-11-vader/blob/3a43059e33d549f03b021d6b417b7eeba66cf62e/contracts/twap/TwapOracle.sol#L322

Only the owner of TwapOracle can call update on the oracle. Should the owner desire they could cease calling update on the oracle for a period. Over this period the relative prices of VADER and USDC will vary.

After some period timeElapsed the owner can call update again. A TWAP is a lagging indicator and due to the owner ceasing to update the oracle so timeElapsed will be very large, therefore we're averaging over a long period into the past resulting in a value which may not be representative of the current USDV:VADER exchange rate.

The owner can therefore selectively update the oracle so to result in prices which allow them to extract value from the system.

Recommended Mitigation Steps

Remove the permissioning from TwapOracle.update

SamSteinGG (Vader) marked as duplicate

alcueca commented:

Duplicate of which other issue, @SamSteinGG?

SamSteinGG (Vader) commented:

The TWAP oracle module has been completely removed and redesigned from scratch as LBTwap that is subject of the new audit.

Submitted by Reigada

Impact

In the contract StakingRewards, the stake function assume that the amount of stakingToken is transferred to the smart contract after calling the safeTransferFrom function (and thus it updates the \_balances mapping). However, this may not be true if the stakingToken is a transfer-on-fee token or a deflationary/rebasing token, causing the received amount to be less than the accounted amount in the \_balances mapping.

Same can be applied for the withdraw function.

Proof of Concept

https://github.com/code-423n4/2021-11-vader/blob/main/contracts/staking-rewards/StakingRewards.sol#L100-L102

Tools Used

Manual code review

Recommended Mitigation Steps

Get the actual received amount by calculating the difference of token balance before and after the transfer. For example: uint256 balanceBefore = stakingToken.balanceOf(address(this)); stakingToken.safeTransferFrom(msg.sender, address(this), amount); uint256 receivedAmount = stakingToken.balanceOf(address(this)) - balanceBefore; \_totalSupply = \_totalSupply.add(receivedAmount); \_balances\[msg.sender] = \_balances\[msg.sender].add(receivedAmount);

0xstormtrooper (Vader) acknowledged:

VADER / USDV fee on transfer will be removed

Submitted by xYrYuYx

Impact

These calculations are incorrect for linear vesting.

Proof of Concept

i.e. if start amount is 10000, and duration is 100 seconds. After 50 seconds, user can claim 5000 which is 50%

After another 10 seconds, user need to claim 1000 which is 10%, but current calculation return 500.

Tools Used

Manual

Recommended Mitigation Steps

Change formula to User total amount * (block.timestamp – start) / (vesting duration) – user claimed amount.

SamSteinGG (Vader) confirmed

Submitted by jonah1005

add liquidity is vulnerable to MEV

Impact

addLiquidity in the VaderRouter and VaderRouterV2 contract does not check the minimum liquidity amount. This makes users' funds vulnerable to sandwich attacks.

The team says a minimum amount is not required as the VaderPool supports imbalanced mint. However, imbalanced mint is a helper function of buying tokens and providing to lp. A sandwich attack would take over more than 50% of a transaction in an illiquid pool.

Given the current network environment, most transactions in the mempool would be sandwiched. However, users may avoid this attack if they only send tx through flashbot RPC. I consider this is a medium-risk issue.

Proof of Concept

VaderRouterV2.sol#L77-L96

That says a user wants to provide 1M ETH in the pool. Attackers can sandwich this trade as follows:

  1. Buy Vader with 10M ETH and makes ETH extremely cheap
  2. Put user's tx here User's tx would first buy a lot Vader and deposit to the pool.
  3. Since ETH becomes even cheaper in the pool. The MEV attacker buyback ETH and get profit.

Tools Used

None

Recommended Mitigation Steps

Always check how much liquidity a user received in a transaction. A tx would not be sandwiched if it's not profitable.

We could learn a lot about MEV from Robert Miller'tweets.

SamSteinGG (Vader) disputed:

The design of the Thorchain CLP model is meant to prevent flash-loan based attacks as it allows a maximum trade size of 25% on a given iteration with a high-enough fee to render the attack unprofitable. Please request a tangible test case from the warden to consider this exhibit valid.

alcueca (judge) commented:

There is no documentation stating that the deployment of Vader is restricted to Thorchain. The issue is valid.

SamSteinGG (Vader) commented:

@alcueca The model itself is what has this trait, it does not relate to the blockchain implementation itself. It is intended functionality as with its parent implementation.

Submitted by rfa

Impact

In the claimConverted() function, the user can vest their vader token for a certain amount of time, but hasStarted modifier is missing, this can lead to claimConverted() function is callable by anyone, and the user can claim eventhough the vesting havent been started by the owner.

Proof of Concept

https://github.com/code-423n4/2021-11-vader/blob/main/contracts/tokens/vesting/LinearVesting.sol#L158

Recommended Mitigation Steps

add hasStarted modifier

SamSteinGG (Vader) commented:

Duplicate of #89

alcueca (judge) commented:

Not a duplicate, different line.

SamSteinGG (Vader) commented:

@alcueca This should be invalid.

Submitted by jonah1005

Impact

The user would not get full IL compensation if there's not enough funds in the reserve. VaderReserve.sol#L76-L91

VaderReserve.sol#L85

        uint256 actualAmount = _min(reserve(), amount);

While this is reasonable, users should be able to specify the minimum received amount in the transaction. Otherwise, it's vulnerable to some kind of MEV attack.

I consider this is a medium-risk issue.

Proof of Concept

The user can not specify a minimum IL compensation in the router. VaderRouter.sol#L169-L207

The user may not receive the full amount of compensation. VaderReserve.sol#L76-L91

Tools Used

None

Recommended Mitigation Steps

Users should be able to protect themselves when burning lp.

Some possible fixes:

  1. Return the actual amount this line reserve.reimburseImpermanentLoss(msg.sender, coveredloss);
  2. Checks whether there's slippage. Revert if the user doesn't receive the full amount.

We can add a new parameter in the function.

    require(actualCompensation > minimumCompensation);

Or we can check the amountAMin after receiving the compensation. ( assume tokenA is native token)

    require(amountA +actualCompensation > amountAMin);

SamSteinGG (Vader) disputed:

This is intended functionality of the protocol to account for rounding errors and is a principle similar to SushiSwap's MasterChef contract.

alcueca (judge) commented:

The sponsor acknowledges the issue.

SamSteinGG (Vader) commented:

@alcueca They are never meant however it should still be possible to do so. With Uniswap V2, it is possible to interact with the contracts directly however doing so (without using a smart contract) will result in the same vulnerabilities as described in the issue. This is not intended usage and as such does not constitute an issue unless it is implied that the Uniswap V2 implementation is incorrect. Intended functionality of the protocol cannot constitute a risk issue. This has been classified as a medium risk issue but it follows the standardized conventions of implementations like Sushiswap which are live.

Submitted by jonah1005

Impact

First lp provider received liquidity amount same as the nativeDeposit amount and decides the rate. If the first lp sets the pool's rate to an extreme value no one can deposit to the pool afterward. (please refer to the proof of concept section)

A malicious attacker can DOS the system by back-running the setTokenSupport and setting the pools' price to the extreme. I consider this is a medium-risk issue.

Proof of Concept

    deposit_amount = 1000 * 10**18
    get_token(dai, user, deposit_amount*3)
    get_token(vader, user, deposit_amount*3)
    dai.functions.approve(pool.address, deposit_amount*3).transact()
    link.functions.approve(pool.address, deposit_amount*3).transact()


    # deposit_amount = 1000 * 10**18

    # # first deposit 1 wei Dai and 1 vader to the pool
    router.functions.addLiquidity(dai.address, vader.address, 1, 10**18, user, 10**18).transact()
    print('received liquidity', pool.functions.positions(0).call()[2])
    # output log:
    # 1000000000000000000

    # normally deposit to the pool
    router.functions.addLiquidity(dai.address, vader.address, deposit_amount, deposit_amount, user, 10**18).transact()
    print('received liquidity', pool.functions.positions(1).call()[2])

    # output log:
    # 500000000000000000500000000000000000000

    # no one can deposit to the pool now
    # there would be revert

    router.functions.addLiquidity(dai.address, vader.address, 1, deposit_amount, user, 10**18).transact()

VaderMath.sol#L42

    ((totalPoolUnits * poolUnitFactor) / denominator) * slip

Since the scale of the total supply is (10**18)^2, the operation would overflow.

Tools Used

None

Recommended Mitigation Steps

Set a minimum deposit amount (both asset amount and native amount) for the first lp provider.

SamSteinGG (Vader) confirmed

Submitted by defsec

Impact

The consult function in the contract TwapOracle.sol fetches the asset price from a Chainlink aggregator using the latestRoundData function. However, there are no checks on timeStamp, resulting in stale prices. The oracle wrapper calls out to a chainlink oracle receiving the latestRoundData(). It then checks freshness by verifying that the answer is indeed for the last known round. The returned updatedAt timestamp is not checked.

If there is a problem with chainlink starting a new round and finding consensus on the new value for the oracle (e.g. chainlink nodes abandon the oracle, chain congestion, vulnerability/attacks on the chainlink system) consumers of this contract may continue using outdated stale data (if oracles are unable to submit no new round is started)

Proof of Concept

  1. Navigate to "https://github.com/code-423n4/2021-11-vader/blob/607d2b9e253d59c782e921bfc2951184d3f65825/contracts/twap/TwapOracle.sol#L141" contract.

  2. consult function does not check timestamp on the latestRoundData.

Tools Used

None

Recommended Mitigation Steps

Consider to add checks on the return data with proper revert messages if the price is stale or the round is incomplete, for example:

(uint80 roundID, int256 price, , uint256 timeStamp, uint80 answeredInRound) = ETH_CHAINLINK.latestRoundData();
require(timeStamp != 0, "...");

Consider checking the oracle responses updatedAt value after calling out to chainlinkOracle.latestRoundData() verifying that the result is within an allowed margin of freshness.

SamSteinGG (Vader) confirmed

The TWAP oracle module has been completely removed and redesigned from scratch as LBTwap that is subject of the new audit.

Submitted by elprofesor

Impact

Update periods in TWAP oracles reflect risk of an asset. Updating more frequently accurately prices an asset but increases capabilities of manipulation (which should be harder with more stable assets), whereas longer update periods prevent manipulation but does not accurately price assets (due to the time difference between updates). Volatility of an asset should be considered when calculating update periods. However, in Vader's TwapOracle.sol no such considerations are made, the _updatePeriod cannot be changed after deployment of the contract. Additionally, each asset uses the same _updatePeriod which does not adequately account for the differences in risk for each asset. This could lead to price manipulation or inadequate pricing of assets.

Proof of Concept

the only chance to set _updatePeriod

_updatePeriod used in time elapsed calculation

Recommended Mitigation Steps

Add the following function

function setUpdatePeriod(uint256 newUpdatePeriod) external onlyOwner {
    require(newUpdatePeriod > minimumUpdatePeriod, "Update period must be larger than threshold"); // Optional validation based on some risk tolerance
    _updatePeriod = newUpdatePeriod;
}

CloudEllie (organizer) commented:

Warden has requested that we add a second mitigation step/strategy to his submission:

  1. Consider adding a configurable update period per asset, this way we are not incorrectly assuming the same risk profile per asset.

SamSteinGG (Vader) diagreed with severity:

This finding is accurate as the update period should change per oracle, however, it is not of high risk severity.

alcueca (judge) commented:

Agree with sponsor, assets are not directly at risk. Severity 2.

SamSteinGG (Vader) commented:

The TWAP oracle module has been completely removed and redesigned from scratch as LBTwap that is subject of the new audit.

Submitted by defsec

Impact

On the GovernorAlpha contract, function veto has been added. Although the function behaviour is expected, duplicate veto process has not been checked on that function.

Proof of Concept

  1. Navigate to following contract line. (https://github.com/code-423n4/2021-11-vader/blob/607d2b9e253d59c782e921bfc2951184d3f65825/contracts/governance/GovernorAlpha.sol#L562)
    function veto(uint256 proposalId, bool support) external onlyCouncil {
        ProposalState _state = state(proposalId);
        require(
            _state == ProposalState.Active || _state == ProposalState.Pending,
            "GovernorAlpha::veto: Proposal can only be vetoed when active"
        );

        Proposal storage proposal = proposals[proposalId];
        address[] memory _targets = proposal.targets;
        for (uint256 i = 0; i < _targets.length; i++) {
            if (_targets[i] == address(this)) {
                revert(
                    "GovernorAlpha::veto: council cannot veto on proposal having action with address(this) as target"
                );
            }
        }

        VetoStatus storage _vetoStatus = proposal.vetoStatus;
        _vetoStatus.hasBeenVetoed = true;
        _vetoStatus.support = support;

        if (support) {
            queue(proposalId);
        }

        emit ProposalVetoed(proposalId, support);
    }

    /**

  1. The veto progress can be completed per proposal twice.

Tools Used

None

Recommended Mitigation Steps

Consider to check if proposals vetoed before.

VetoStatus storage _vetoStatus = proposal.vetoStatus;
require(!_vetoStatus.hasBeenVetoed, "Vetoed before");

SamSteinGG (Vader) commented:

Duplicate of #61

alcueca (judge) commented:

Not a duplicate

Submitted by leastwood

Impact

The BasePool.mint() function differs from its implementation in BasePoolV2.mint() in which it lacks an onlyRouter modifier. This ensures that users cannot call this function directly as VaderRouter.addLiquidity() performs some necessary input validation which can be bypassed by directly calling BasePool.mint().

Proof of Concept

Tools Used

Manual code review.

Recommended Mitigation Steps

Consider adding an onlyRouter modifier to the BasePool.mint() function to ensure users cannot directly call this function.

SamSteinGG (Vader) disputed:

The pool contracts, similarly to Uniswap V2, are never meant to be interacted with directly.

alcueca (judge) commented:

That's what the modifier would do.

SamSteinGG (Vader) commented:

They are never meant however it should still be possible to do so. With Uniswap V2, it is possible to interact with the contracts directly however doing so (without using a smart contract) will result in the same vulnerabilities as described in the issue. This is not intended usage and as such does not constitute an issue unless it is implied that the Uniswap V2 implementation is incorrect.

Submitted by leastwood

Impact

The BasePool.swap() function differs from its implementation in BasePoolV2.swap() in which it lacks an onlyRouter modifier. This ensures that users cannot call this function directly as VaderRouter._swap() performs some necessary input validation which can be bypassed by directly calling BasePool.swap().

Proof of Concept

Tools Used

Manual code review.

Recommended Mitigation Steps

Consider adding an onlyRouter modifier to the BasePool.swap() functions to ensure users cannot directly call these functions.

SamSteinGG (Vader) disputed:

The pool contracts, similarly to Uniswap V2, are never meant to be interacted with directly.

alcueca (judge) commented:

That's what the modifier would do.

SamSteinGG (Vader) commented:

@alcueca They are never meant however it should still be possible to do so. With Uniswap V2, it is possible to interact with the contracts directly however doing so (without using a smart contract) will result in the same vulnerabilities as described in the issue. This is not intended usage and as such does not constitute an issue unless it is implied that the Uniswap V2 implementation is incorrect.

Submitted by leastwood

Impact

TwapOracle.consult() is missing additional validations to ensure that the round is complete and has returned a valid/expected price. The consult() improperly casts an int256 price to uint256 without first checking the value. As a result, the variable may underflow and return an unexpected result, potentially causing further issues in other areas of the protocol that rely on this function.

Additionally, the GasThrottle.validateGas() modifier utilises Chainlink's latestAnswer() function which lacks additional checks for stale data. The latestRoundData() function facilitates additional checks and should be used over latestAnswer().

Proof of Concept

Tools Used

Manual code review. Chainlink best practices.

Recommended Mitigation Steps

Consider validating the output of latestRoundData() to match the following code snippet:

     (
        uint80 roundID,
        int256 price,
        ,
        uint256 updateTime,
        uint80 answeredInRound
      ) = ETH_CHAINLINK.latestRoundData();
      require(
          answeredInRound >= roundID,
          "Chainlink Price Stale"
      );
      require(price > 0, "Chainlink Malfunction");
      require(updateTime != 0, "Incomplete round");

This needs to be updated in TwapOracle.consult() and in GasThrottle.validateGas(). The latter instance should have the latestAnswer() function replaced with latestRoundData() in order to avoid stale data.

SamSteinGG (Vader) confirmed

The TWAP oracle module has been completely removed and redesigned from scratch as LBTwap that is subject of the new audit.

Submitted by cmichel

The GovernorAlpha's council cannot veto proposals that perform a call to the contract itself. This can be exploited by malicious proposal creators by appending a new call at the end of their proposal that simply calls an innocent function like GovernorAlpha.votingDelay().

Impact

The veto procedure can easily be circumvented, making the council unable to veto.

Recommended Mitigation Steps

The veto check must be further restricted by specifying the actual function selector that is not allowed to be vetoed, like changeCouncil.

SamSteinGG (Vader) commented:

Duplicate of #61

alcueca (judge) commented:

Not a duplicate

Submitted by cmichel

The LinearVesting.vestFor function (which is called by Converter) reverts if there already exists a vest for the user:

 require(
    vest[user].amount == 0,
    "LinearVesting::selfVest: Already a vester"
);

There's an attack where a griefer frontruns the vestFor call and instead vests the smallest unit of VADER for the user. The original transaction will then revert and the vest will be denied

Recommended Mitigation Steps

There are several ways to mitigate this. The most involved one would be to allow several separate vestings per user.

SamSteinGG (Vader) confirmed)

Submitted by cmichel

The TWAPOracle.getRate function simply performs an integer division to compute the rate.

function getRate() public view returns (uint256 result) {
    uint256 tUSDInUSDV = consult(USDV);
    uint256 tUSDInVader = consult(VADER);
    // @audit shouldn't this scale by 1e18 first? otherwise easily 0
    result = tUSDInUSDV / tUSDInVader;
}

It should first be scaled by some value, for example, 1e18.

Impact

The rate has no decimal precision and if tUSDInVader > tUSDInUSDV, the rate will always be zero.

The usdvtoVader and vaderToUsdv functions will return incorrect values.

Recommended Mitigation Steps

// return as a rate with 18 decimals instead
result = tUSDInUSDV * 1e18 / tUSDInVader;

SamSteinGG (Vader) confirmed

The TWAP oracle module has been completely removed and redesigned from scratch as LBTwap that is subject of the new audit.

Submitted by cmichel

The TWAPOracle.consult function is unclear to the auditor. It seems to iterate through all registered pairs that share the token parameter (USDV or VADER) and then sums up the foreign token pair per token price. And divides this sum (sumNative) by the summed-up USD price of these foreign token pairs (sumUSD).

I think the idea is to create some kind of average price but doing it like this does not seem to be effective because large prices are weighted a lot stronger than low prices.

Example

Assume there are 3 USDV pairs registered: (ETH, DAI, USDC).

Oracle Price: USDV/ETH 4500, USDV/DAI 1, USDV/USDC 1 Pool price: USDV/ETH 4500, USDV/DAI 10, USDV/USDC 10

Even though the DAI and USDC pool prices are off by 10x, the final result is 4502/4520 = 0.996017699 very close to a price of 1.0 which seems strange.

Recommended Mitigation Steps

Document how the algorithm works and make sure it's correct. Resolve the TODO.

SamSteinGG (Vader) confirmed

The TWAP oracle module has been completely removed and redesigned from scratch as LBTwap that is subject of the new audit.

Submitted by WatchPug

There are ERC20 tokens that charge fee for every transfer() or transferFrom(), E.g Vader token.

In the current implementation, BasePoolV2.sol#mint() assumes that the received amount is the same as the transfer amount, and uses it to calculate liquidity units.

https://github.com/code-423n4/2021-11-vader/blob/429970427b4dc65e37808d7116b9de27e395ce0c/contracts/dex-v2/pool/BasePoolV2.sol#L168-L229

function mint(
    IERC20 foreignAsset,
    uint256 nativeDeposit,
    uint256 foreignDeposit,
    address from,
    address to
)
    external
    override
    nonReentrant
    onlyRouter
    supportedToken(foreignAsset)
    returns (uint256 liquidity)
{
    (uint112 reserveNative, uint112 reserveForeign, ) = getReserves(
        foreignAsset
    ); // gas savings

    nativeAsset.safeTransferFrom(from, address(this), nativeDeposit);
    foreignAsset.safeTransferFrom(from, address(this), foreignDeposit);

    PairInfo storage pair = pairInfo[foreignAsset];
    uint256 totalLiquidityUnits = pair.totalSupply;
    if (totalLiquidityUnits == 0) liquidity = nativeDeposit;
    else
        liquidity = VaderMath.calculateLiquidityUnits(
            nativeDeposit,
            reserveNative,
            foreignDeposit,
            reserveForeign,
            totalLiquidityUnits
        );

    require(
        liquidity > 0,
        "BasePoolV2::mint: Insufficient Liquidity Provided"
    );

    uint256 id = positionId++;

    pair.totalSupply = totalLiquidityUnits + liquidity;
    _mint(to, id);

    positions[id] = Position(
        foreignAsset,
        block.timestamp,
        liquidity,
        nativeDeposit,
        foreignDeposit
    );

    _update(
        foreignAsset,
        reserveNative + nativeDeposit,
        reserveForeign + foreignDeposit,
        reserveNative,
        reserveForeign
    );

    emit Mint(from, to, nativeDeposit, foreignDeposit);
    emit PositionOpened(from, to, id, liquidity);
}

Recommended

Consider calling balanceOf() to get the actual balances.

SamSteinGG (Vader) disagreed with severity:

Tokens with a fee on transfer or rebasing tokens are not meant to be supported by the protocol, hence why the tokens supported are voted on by the DAO.

alcueca (judge) commented:

Not stated in the documentation, therefore the issue is valid.

SamSteinGG (Vader) commented:

A medium risk issue cannot constitute lack of documentation of a trait of the system. If the inclusion of tokens to the DEX was not privileged, the issue would be valid but it is not an open function and thus the scenario described would never unfold.

Submitted by TomFrenchBlockchain

Impact

Any unaccounted for tokens on VaderPoolV2 can be siphoned off by anyone

Proof of Concept

VaderPoolV2 has a rescue function which allows any unaccounted for tokens to be recovered.

https://github.com/code-423n4/2021-11-vader/blob/429970427b4dc65e37808d7116b9de27e395ce0c/contracts/dex-v2/pool/BasePoolV2.sol#L505-L517

However there is no access control on this function which means than should any tokens be sent to VaderPoolV2 by accident they'll just be scooped up by flashbots rather than being recoverable by the original owner or Vader governance.

This also means that any rebasing tokens which are deposited into VaderPoolV2 will have any rebases lost rather than being recoverable by Vader governance.

Recommended Mitigation Steps

Permission this function to only allow Vader governance to claim tokens.

SamSteinGG (Vader) commented:

Duplicate #28

alcueca (judge) commented:

Not a duplicate, this issue correctly states that the function is vulnerable to front-running.

SamSteinGG (Vader) commented:

The function is equivalent to the Uniswap V2 rescue function which is not classified as incorrect.

Submitted by TomFrenchBlockchain

Impact

Potential DOS on swaps

Proof of Concept

BasePool and BasePoolV2 make use of a validateGas modifier on swaps which checks that the user's gas price is below the value returned by _FAST_GAS_ORACLE.

https://github.com/code-423n4/2021-11-vader/blob/429970427b4dc65e37808d7116b9de27e395ce0c/contracts/dex/utils/GasThrottle.sol#L9-L20

Should _FAST_GAS_ORACLE be compromised to always return zero then all swaps will fail. There is no way to recover from this scenario.

Recommended Mitigation Steps

Either remove GasThrottle.sol entirely or allow governance to turn it off

SamSteinGG (Vader) confirmed

Submitted by leastwood

Impact

The VaderBond.deposit() function overwrites a depositors bond info on each call with the updated payout information. If any of the vesting is left unclaimed before a call to deposit() is made, the vesting period is reset to terms.vestingTerm, resulting in the bond holder having to wait again in order to claim tokens that they could previously claim.

Proof of Concept

https://github.com/code-423n4/2021-11-vader/blob/main/repo/vader-bond/contracts/VaderBond.sol#L192

Tools Used

Manual code review.

Recommended Mitigation Steps

Consider preventing users from depositing to an existing bond holder or alternatively when a deposit is made, force the user to redeem any claimable tokens in the same function.

0xstormtrooper (Vader) acknowledged:

Users will be warned that depositing resets the vesting term. This will also be documented on the contract.

Low Risk Findings (41)

Non-Critical Findings (36)

Gas Optimizations (56)

Disclosures

C4 is an open organization governed by participants in the community.

C4 Contests incentivize the discovery of exploits, vulnerabilities, and bugs in smart contracts. Security researchers are rewarded at an increasing rate for finding higher-risk issues. Contest submissions are judged by a knowledgeable security researcher and solidity developer and disclosed to sponsoring developers. C4 does not conduct formal verification regarding the provided code but instead provides final verification.

C4 does not provide any guarantee or warranty regarding the security of this project. All smart contract software should be used at the sole risk and responsibility of users.