Zaros Part 1

Summary: Attackers can manipulate position sizes and funding fee calculations by strategically placing trades through front running, potentially leading to unfair advantages and financial harm to other users.

Vulnerability Details: The contract's mechanisms for calculating mark prices, notional values, and funding fees are susceptible to manipulation. By executing large or timed trades, attackers can influence these calculations in their favor. This could result in skewed margin requirements and unrealized profit/loss figures that benefit the attacker while disadvantaging others.

Vulnerable Areas:
One: Mark Price Calculation:

Two. Funding Fee Per Unit Determination:
Link

Three. Margin Requirement Adjustments: Recalculation based on updated positions

Four. Unrealised PnL Impacts: Sudden large trades influencing subsequent adjustments indirectly benefiting attackers and detrimental to others involved negatively.

Impact: One. Financial Loss: Other users may suffer financial losses due to manipulated market conditions.

Two. Unfair Advantage: Attackers gain an unfair advantage over honest trader

Tools Used: Manual Review

Recommendations: One.Time-weighted Average Price (TWAP)* Use TWAP price calculations to mitigate short-term manipulations

Two. Slippage Protection* -Allow users specify acceptable slippage limits prevent significant deviations intended execution prices