Summary

The protocol applies a fee when users withdraw funds, calculated based on the amount withdrawn. However, the calculation rounds down the value of the fees, allowing a malicious user to avoid paying the fees by withdrawing in chunks of small amount. This behavior can especially be exploited on Layer 2 blockchains where transactions are cheaper.

Vulnerability Details

When a withdraw occurs, the protocol deducts a fee from the amount specified if they are interested in the token being withdrawn. The fees are calculated as follow :

Because the feeAmount is rounded down, a malicious user can exploit this by making small withdraws, causing the fee to round down to 0. This is more likely to be exploited on L2 blockchains using tokens with low decimal precision, since the gas is cheaper and the amount of token withdrawn per "small withdraw" is greater.

This vulnerability is also amplified when the fee amount is set under than its maximal value of 10 %, as smaller percentages more easily round down to zero.

Example

For a clearer illustration, consider a token like Gemini Dollar (GUSD), which has 2 decimals places. The following scenario applies the maximum fee allowed by the protocol.

Given a withdrawal amount of 9 units (representing 0.09 GUSD), with a 10% fee:

Note : The protocol uses UD60x18 to handle fixed-point calculations by scaling numbers to 1e18. For simplicity, unscaled values are shown here.

feeAmount = 9 * 0.1 = 0.9, which rounds down to 0.

Impact

This vulnerability enables users to avoid fees on multiple withdrawals, significantly reducing the protocol's revenue.

Tools Used

Manual review.

Recommendations

Note that the current implementation of the protocol allows any user to withdraw to the recipient. This means the issue can somehow already be mitigated if the withdrawal is forced to the recipient with a value high enough to take fees into account before the attack is made.

Beside this, I see two different approach to fixing this issue :

• Forcing user to send the max withdrawal to the recipient, instead of allowing a variable amount.

• Rounding up the protocol fee to prevent user abuse.

Implementing either solution would help secure the protocol's fee revenue against abuse.