Calls transfer()/transferFrom() With IERC20

• Severity: Medium

• Confidence: High

Description

The transfer() and transferFrom() methods are part of the ERC-20 standard, designed for transferring tokens between accounts. However, these methods could be risky when transferring tokens to smart contracts because they don't guarantee that the receiving smart contract will handle the transferred tokens correctly, potentially leading to permanent token loss. ERC-20 standard doesn't include a 'onTokenReceived' function or similar to alert the recipient about incoming transfers. Therefore, the 'transfer' and 'transferFrom' functions are not reliable for interactions with arbitrary contracts. A safer alternative is to use safeTransfer() and safeTransferFrom() methods provided by libraries like OpenZeppelin's SafeERC20. These methods add a layer of protection by checking if the recipient is a contract and if it has a function to handle incoming tokens. If these checks are not passed, the transfer operation is not executed, hence preventing potential token loss.