Aave DIVA Wrapper

Summary

The minting and burning of tokens, especially for wTokens in contract AaveDIVAWrapperCore.sol, could be insecure or incorrectly handled.

Vulnerability Details

The functions _redeemWToken and _redeemWTokenPrivate deal with minting and burning wTokens without fully securing the process. If an external contract or malicious user gains control over the minting and burning mechanism, they could create or destroy tokens arbitrarily, leading to inflation or deflation of the token supply.

Impact

Improper handling of token minting and burning can lead to the creation or destruction of tokens, which could destabilize the token's value and undermine the protocol’s integrity.

Proof of Concept for Insecure Token Minting and Burning

Overview:

The smart contract allows minting and burning of tokens but lacks proper access controls and validation, potentially enabling unauthorized users to manipulate the token supply. This could lead to inflation or deflation attacks, affecting token economics and trust in the system.

Actors:

• Attacker: A malicious user attempting to exploit the insecure minting or burning mechanism.

• Victim: Legitimate users holding tokens that may lose value due to supply manipulation.

• Protocol: The token contract that allows minting and burning operations.

Working Test Case (Solidity + Hardhat)

This code demonstrating how an attacker could exploit the insecure minting and burning mechanism

Line-by-Line Breakdown:

1. InsecureToken Contract:

• mint(address to, uint256 amount): Allows anyone to mint tokens arbitrarily.

• burn(uint256 amount): Allows anyone to burn their own tokens, but lacks owner-based restrictions.

** 2 Attacker Contract:**

• exploitMint(): Calls mint to create tokens out of thin air.

• exploitBurn(): Burns tokens freely without any verification of ownership rules.

Exploit Scenario:

Initial State:

• The contract is deployed, and users have legitimate token balances.

• The attacker has no special privileges.

1. Step 1: Attacker Mints Tokens:

   • The attacker calls mint(address(this), 1_000_000 ether), granting themselves excessive tokens.

2. Step 2: Attacker Burns Tokens:

   • The attacker calls burn(1_000_000 ether), affecting the token supply and potentially manipulating price action.

3. Outcome:

   • The attacker inflates their balance or depletes token supply at will.

   • This could lead to price manipulation, unfair token distributions, or disruptions in DeFi applications.

4. Implications:

   • If this token is used in DeFi protocols (e.g., liquidity pools), the vulnerability could break trading mechanisms.

   • Token holders might experience a loss in value due to unexpected supply changes.

Tools Used

Manual code review

Recommendations

• Access Control:

  • Restrict mint and burn functions to only be callable by authorized roles (e.g., onlyOwner or a governance-controlled entity).

• Implement Role-Based Access Control (RBAC):

  • Use OpenZeppelin’s AccessControl to enforce permissions.

• Add Minting Limits:

  • Ensure there’s a cap on the maximum supply of tokens.

• Burning Restrictions:

  • Allow only specific addresses to burn tokens, such as the original minter or a governance-controlled contract.