Aave DIVA Wrapper

Summary

The _createContingentPool function reads _collateralTokenToWToken[_poolParams.collateralToken] at the stores it in _wToken. Them, it calls _handleTokenOperations, which performs token transfers. However, between these between these two actions, an attacker could front-run the transaction and modify _collateralTokenTowToken causing unexpected behavior.

Vulnerability Details

THE NORMAL EXECUTION

• User submits a transaction to create pool uwsing collateralToken (e.g., USDC).

• _createContingentPool looks up the corresponding wToken (wUSDC)

• _handleTokenOperations is called to:
  - Transfer USDC from user
  - Mint wUSDC as collateral

• The pool is successfully with wUSDC as collateral.

THE FRONT-RUNNING ATTACK
Attacker's goal is to swap the wToken Before Execution

1. User Submits Transaction

• A user wants to create a pool using USDC as collateral

• _createContingentPool reads
  _collateralTokenToWToken[USDC] = wUSDC.

• The transaction is pending in the mempool.

2. Attacker Spots the pending Transaction

• The attacker monitors the mempool for the pool creation transactions.

• They see that
  _collateralTokenToWToken is being used but not locked.

3. Attacker Front-Runs & Modifies
   _collateralTokenToWToken

• Before the user's transaction is executed, the attacker calls registerCollateralToken or any function that modifies _collateralTokenToWtoken[USDC] = MaliciousWToken;

• They increase gas fees to ensure their transaction is processed before the user's

4. User's Transaction Executes After Attack

• createContingentPool still uses the old _wToken from memory, thinking it's wUSDC.

• But _handleTokenOperations fetches the updated mapping now pointing to MaliciousWToken.

• The wrong wToken is minted and supplied to the pool.

Impact

Wrong wToken being used
Fund Mismanagement
Potential Token Hijacking
Pool Integrity Compromised
Irreversible Transaction

Tools Used

Manual Review

Recommendations

Modify _handleTokenOperations to double-check that _collateralTokenToWToken has not changed between reading and execution.