Beedle - Oracle free perpetual lending

Summary

A malicious/compromised owner can set the zero address as the fee receiver. This will cause all ERC20 tokens that check that they are transferring to 0 to revert and thus breaking all protocol operations. Changing this configuration can also be done instant (no timelock).

If this is done during an auction, nobody can call refinance, or seize the loan after it expires, but when the malicious/compromised owner sets a valid address, all collateral will be passed their auction expiry and can be seized leading to severe user losses.

Vulnerability Details

The fee receiver address can be set using the Lender::setFeeReceiver function:

To this address, on almost all protocol logic, fees are sent:

• when repaying a loan; repay

• when, as a lender, you give your loan to a new lender; giveLoan

• when buying the loan, as a new lender, during an auction; buyLoan

• when seizing the collateral after a failed auction; seizeLoan

• when refinancing, as a borrower, your loan so your collateral is not lost; refinance

If the ERC20 collateral reverts on sending to zero address, then all these operations will revert. This is very common, OpenZeppelin's implementation, for example, does this

A malicious owner would simply need to call Lender::setFeeReceiver with a non-zero address, after all auctions have expired, and he would then be able to steal all auctioned collateral at that time.

Impact

A malicious protocol owner can make all borrowers default lose their collateral.

Tools Used

Manual analysis.

Recommend Mitigation

• do not allow the setting of zero address as a fee receiver

• add a timelock for when setting the fee receiver