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Submission Details
Severity: medium
Invalid

Fee on transfer tokens will not be supported during swap

syahiramali

Summary

Fee on transfer tokens will be able to perform swaps because there is no additional slippage that the user can set. The protocol has stated that they intend to support a Fee on transfer token such as PAXG.

Vulnerability Details

Fee on transfer tokens will not be able to be swapped with the current implementation, due to the fact there is no additional slippage that allows for a lower return in amountOutMinimum, or the implementation of the router function swapExactTokensForTokensSupportingFeeOnTransferTokens() that supports fee on transfer token swaps.

We can see in the function calculateMinimumAmountOut() gets the exact value of amountOutMinimum required to perform the swap without any slippage.

​
function calculateMinimumAmountOut(bytes32 _inTokenSymbol, bytes32 _outTokenSymbol, uint256 _amount) private view returns (uint256) {
ISmartVaultManagerV3 _manager = ISmartVaultManagerV3(manager);
uint256 requiredCollateralValue = minted * _manager.collateralRate() / _manager.HUNDRED_PC();
uint256 collateralValueMinusSwapValue = euroCollateral() - calculator.tokenToEur(getToken(_inTokenSymbol), _amount);
return collateralValueMinusSwapValue >= requiredCollateralValue ?
0 : calculator.eurToToken(getToken(_outTokenSymbol), requiredCollateralValue - collateralValueMinusSwapValue);
}
​

Impact

The protocol has stated that they intend to support a Fee on transfer token such as PAXG. A fee on transfer token will have a high chance of failing during swap because there is no slippage calculation done, or the implementation of the router function swapExactTokensForTokensSupportingFeeOnTransferTokens(). This will result in a user not being able to swap their assets, and could be potentially liquidated during a high volatile period.

Tools Used

Manual Review

Recommendations

To solve this issue, the calculateMinimumAmountOut() function could take into account of a user's slippage and risk tolerance for the swap. Or they could implement the function swapExactTokensForTokensSupportingFeeOnTransferTokens() that will check the recipient amount rather than the sending amount when calculating the invariant

Updates

Lead Judging Commences

hrishibhat Lead Judge over 1 year ago
Submission Judgement Published
Validated
Assigned finding tags:

fee-on-transfer

hrishibhat Lead Judge over 1 year ago
Submission Judgement Published
Invalidated
Reason: Out of scope
Assigned finding tags:

fee-on-transfer

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