Tadle
Tadle
DeFiFoundry
27,750 USDC
View results
Previous Next
Submission Details
Severity: low
Invalid

Asymmetric Settlement Mechanisms Enabling Market Manipulation

dimi6oni

Summary

The Tadle protocol implements asymmetric settlement mechanisms for ask and bid offers in its pre-market infrastructure. This asymmetry allows for partial settlements of ask offers but requires full settlements of bid offers, creating opportunities for sophisticated attackers to artificially influence market prices and liquidity.

Vulnerability Detail

The asymmetry in settlement mechanisms is primarily observed in two functions within the DeliveryPlace contract:

settleAskMaker function allows partial settlements:

function settleAskMaker(address _offer, uint256 _settledPoints) external {
// ... (input validation)
if (_settledPoints > offerInfo.usedPoints) {
revert InvalidPoints();
}
// ... (other checks)
uint256 settledPointTokenAmount = marketPlaceInfo.tokenPerPoint * _settledPoints;
// ... (token transfers)
IPerMarkets perMarkets = tadleFactory.getPerMarkets();
perMarkets.settledAskOffer(
_offer,
_settledPoints,
settledPointTokenAmount
);
// ... (event emission)
}
​

closeBidOffer function requires full settlement:

function closeBidOffer(address _offer) external {
// ... (various checks)
uint256 refundAmount = OfferLibraries.getRefundAmount(
offerInfo.offerType,
offerInfo.amount,
offerInfo.points,
offerInfo.usedPoints,
offerInfo.collateralRate
);
// ... (refund and status update)
}
​

This asymmetry is further compounded by the createTaker function in the PreMarkets contract, which handles both ask and bid offers:

function createTaker(address _offer, uint256 _points) external payable {
// ... (checks and balances)
OfferInfo storage offerInfo = offerInfoMap[_offer];
// ... (update offer info)
stockInfoMap[stockAddr] = StockInfo({
// ... (stock info initialization)
});
// ... (update balances and emit events)
}
​

Impact

The impact of this design choice includes:

  • Liquidity Imbalances: The ability to partially settle ask offers but not bid offers could lead to skewed market liquidity.

  • Price Volatility: Rapid creation and partial settlement of ask offers combined with full closures of bid offers could induce artificial price swings.

  • User Losses: Smaller traders or less sophisticated users might find themselves trapped in unfavorable positions due to rapid market movements.

Tool used

Manual Review

Recommendation

  1. Implement Symmetric Settlement: Allow partial settlements for both ask and bid offers, or require full settlements for both. This would eliminate the asymmetry that could be exploited.

  2. Gradual Settlement: For large offers, implement a mechanism for gradual settlement over time, rather than allowing instant large-scale settlements.

Updates

Lead Judging Commences

0xnevi Lead Judge
about 1 year ago
0xnevi Lead Judge 12 months ago
Submission Judgement Published
Invalidated
Reason: Too generic

Support

FAQs

Can't find an answer? Chat with us on Discord, Twitter or Linkedin.