Aave DIVA Wrapper

Root cause plus impact: The contract contains functions that perform multiple external calls before internal state changes, potentially allowing reentrancy attacks that could lead to unauthorized access or funds loss.

Summary

I identified potential reentrancy vulnerabilities in several functions within the contract, including _handleTokenOperations, _redeemWTokenPrivate, and _claimYield. These functions perform multiple external calls before making internal state changes, creating an opportunity for malicious actors to exploit reentrancy attacks.

Vulnerability Details

1. _handleTokenOperations:

   • Performs multiple external calls before updating internal state

   • Potential for reentrancy if called by malicious contracts

2. _redeemWTokenPrivate:

   • Executes external calls before updating internal balances

   • Could be exploited if called repeatedly during transaction execution

3. _claimYield:

   • Makes external calls before finalizing yield calculations

   • Susceptible to reentrancy if used improperly

Root Cause

The root cause of these vulnerabilities stems from the order of operations in the affected functions. They perform external interactions (calls to other contracts or addresses) before completing their internal logic and state updates. This sequence allows for potential reentrancy if called by malicious contracts with fallback functions that can trigger repeated calls.

Impact

If exploited, these vulnerabilities could lead to:

1. Unauthorized access to sensitive operations

2. Potential loss of funds through repeated withdrawals

3. Unexpected state changes in the contract

4. Compromise of the entire system's security and integrity

Tools Used

To analyze this finding, I used:

1. Solidity static analysis tools ( Slither, Mythril)

2. Formal verification tools

3. Manual code review

Proof of Concept

To demonstrate the potential impact, we simulated a reentrancy attack using Hardhat:

This simulation demonstrates how an attacker could repeatedly call handleTokenOperations while the transaction is still executing, potentially draining funds without updating balances.

Mitigation

To mitigate these vulnerabilities, consider implementing the following:

1. Use OpenZeppelin's ReentrancyGuard library:

   import "@openzeppelin/contracts/security/ReentrancyGuard.sol";

   ​

   contract TokenOperations is ReentrancyGuard {

   // ...

   }

2. Apply the nonReentrant modifier to vulnerable functions:

   function handleTokenOperations() external payable nonReentrant {

   // Function body

   }

3. Follow the Checks-Effects-Interactions pattern:

   • Perform checks first

   • Update state variables second

   • Interact with external contracts last

4. Consider using a pull payment pattern instead of push payments for sensitive operations.