First Flight #18: T-Swap
First Flight #18
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Submission Details
Severity: high
Valid

In `TSwapPool::_swap` the extra tokens given to users after every `swapCount` breaks the protocols invariant

coffee

Summary

The protocol follows this invariant x * y = k. Where:

  • x: The balance of the pool token

  • y: The balance of WETH

  • k: The constant product of the two balances

This means, that whenever the balances change in the protocol, the ratio between the two amounts should remain constant. However, this is broken due to the extra incentive in the _swap function for every 10 swaps. Meaning that over time the protocol funds will be drained.

swap_count++;
if (swap_count >= SWAP_COUNT_MAX) {
swap_count = 0;
outputToken.safeTransfer(msg.sender, 1_000_000_000_000_000_000);
}

Vulnerability Details

A user could maliciously drain the protocol of funds by doing many swaps and collecting the extra incentive given out by the protocol for every 10th swap.

Impact

This test below shows that after 10 swaps, the expected value changes are not correct

function testDepositSwapInvariantBreak() public {
vm.startPrank(liquidityProvider);
weth.approve(address(pool), 100e18);
poolToken.approve(address(pool), 100e18);
pool.deposit(100e18, 100e18, 100e18, uint64(block.timestamp));
vm.stopPrank();
​
uint256 outputWeth = 1e17;
​
vm.startPrank(user);
poolToken.approve(address(pool), type(uint256).max);
poolToken.mint(user, 100e18);
​
pool.swapExactOutput(poolToken, weth, outputWeth, uint64(block.timestamp));
pool.swapExactOutput(poolToken, weth, outputWeth, uint64(block.timestamp));
pool.swapExactOutput(poolToken, weth, outputWeth, uint64(block.timestamp));
pool.swapExactOutput(poolToken, weth, outputWeth, uint64(block.timestamp));
pool.swapExactOutput(poolToken, weth, outputWeth, uint64(block.timestamp));
pool.swapExactOutput(poolToken, weth, outputWeth, uint64(block.timestamp));
pool.swapExactOutput(poolToken, weth, outputWeth, uint64(block.timestamp));
pool.swapExactOutput(poolToken, weth, outputWeth, uint64(block.timestamp));
pool.swapExactOutput(poolToken, weth, outputWeth, uint64(block.timestamp));
​
int256 startingY = int256(weth.balanceOf(address(pool)));
int256 expectedDeltaY = int256(-1) * int256(outputWeth);
​
pool.swapExactOutput(poolToken, weth, outputWeth, uint64(block.timestamp));
vm.stopPrank();
​
uint256 endingY = weth.balanceOf(address(pool));
int256 actualDeltaY = int256(endingY) - int256(startingY);
assertEq(actualDeltaY, expectedDeltaY);
}

Tools Used

--Foundry

Recommendations

It is recommended to remove the extra incentive mechanism in the _swap function.

function _swap(IERC20 inputToken, uint256 inputAmount, IERC20 outputToken, uint256 outputAmount) private {
if (_isUnknown(inputToken) || _isUnknown(outputToken) || inputToken == outputToken) {
revert TSwapPool__InvalidToken();
}
- swap_count++;
- // Fee-on-transfer
- if (swap_count >= SWAP_COUNT_MAX) {
- swap_count = 0;
- outputToken.safeTransfer(msg.sender, 1_000_000_000_000_000_000);
inputToken.safeTransferFrom(msg.sender, address(this), inputAmount);
outputToken.safeTransfer(msg.sender, outputAmount);
}
Updates

Appeal created

inallhonesty Lead Judge about 1 year ago
Submission Judgement Published
Validated
Assigned finding tags:

In `TSwapPool::_swap` the extra tokens given to users after every swapCount breaks the protocol invariant of x * y = k

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