QuantAMM

Summary

While the current logic ensures the value is greater than or equal to 0.01 and less than 1/n (where n is the number of tokens) in the _setRule function of the QuantAMMWeightedPool.sol contract, it fails to explicitly enforce the stated upper limit of 0.49.
Additionally, if the weight of one asset is < 1/n, the total weights cannot sum to 1. The absence of this check could result in imbalanced asset weights, disproportionately affecting pool allocations, pricing, etc.

Vulnerability Details

The issue is found in the _setRule function of QuantAMMWeightedPool.sol contract
pkg/pool-quantamm/contracts/QuantAMMWeightedPool.sol:_setRule#L779:

The logic checks:

1. The guard rail is less than 1/n, where n is the number of tokens.

2. The guard rail is greater than or equal to 0.01.

However, If the weight of one asset is < 1/n, at least one other asset must have a weight > 1/n. Otherwise, the total weights cannot sum to 1.

Additionally, the comments state that the guard rail value "cannot be more than 0.49 or less than 0.01". The absence of an explicit check for <= 0.49 introduces the risk of exceeding this stated limit. For example: With n = 2, the upper bound 1/n = 0.5. A value of 0.5 would pass validation but violates the intended maximum limit of 0.49.

Impact

1. Imbalance in Asset Weights:

   • The guard rail ensures that weights for individual assets remain within a reasonable range. If the weight of one asset is < 1/n, at least one other asset must have a weight > 1/n to ensure the total weights sum to 1. Allowing values outside the intended bounds could disrupt this balance, potentially causing:

     • Disproportionate pool allocations where certain assets dominate the pool, affecting fairness and efficiency.

     • Deviations from expected pool behavior, leading to issues such as pricing errors, increased slippage, or unintended risks for users.

2. Violation of Intended Constraints:

   • If n = 2, the current validation allows a guard rail value of 0.5, which contradicts the stated maximum limit of 0.49. This creates a mismatch between the code's logic and its documented intent, leading to unexpected behavior.

Tools Used

Manual Review

Recommendations

It is recommended to add a check to enforce a more reasonable upper limit, for example <= 0.49. Alternatively, please use <= instead of <, as shown below: