Aave DIVA Wrapper
DIVA
HardhatDeFi
15,000 USDC
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Submission Details
Severity: high
Invalid

`AaveDIVAWrapperCore::_addLiquidity` Potential Flash Loan Manipulation Risk

mukulkolpe

Summary

AaveDIVAWrapperCore::_addLiquidity Potential Flash Loan Manipulation Risk

Vulnerability Details

The _addLiquidity function lacks sufficient safeguards against flash loan attacks, potentially allowing an attacker to manipulate liquidity addition with temporary token balance inflation.

Impact

  • Attackers could artificially inflate or manipulate liquidity

  • Potential to exploit price discrepancies

  • Risk of economic value extraction from the protocol

Proof of Concept

describe('Flash Loan Liquidity Manipulation Attack', function() {
let s, poolId, attacker, flashLoanAmount;
​
beforeEach(async () => {
s = await setupWithPool();
poolId = s.poolId;
attacker = s.acc2;
});
​
it('Should detect potential liquidity manipulation via flash loan', async () => {
const tokenHolder = s.impersonatedSigner;
await hre.network.provider.request({
method: "hardhat_impersonateAccount",
params: [tokenHolder.address],
});
​
const originalPoolBalance = await s.diva.getPoolParameters(poolId);
const flashLoanAmount = originalPoolBalance.collateralBalance.mul(100);
​
await s.collateralTokenContract
.connect(tokenHolder)
.approve(s.aaveDIVAWrapper.target, flashLoanAmount);
​
await expect(
s.aaveDIVAWrapper
.connect(tokenHolder)
.addLiquidity(
poolId,
flashLoanAmount,
tokenHolder.address,
tokenHolder.address
)
).to.be.revertedWith("Liquidity addition exceeds safe limits");
});
​
it('Should prevent massive liquidity addition beyond percentage threshold', async () => {
const originalPoolBalance = await s.diva.getPoolParameters(poolId);
const maxAllowedLiquidity = originalPoolBalance.collateralBalance.mul(10);
​
await expect(
s.aaveDIVAWrapper
.connect(s.impersonatedSigner)
.addLiquidity(
poolId,
maxAllowedLiquidity,
s.impersonatedSigner.address,
s.impersonatedSigner.address
)
).to.be.revertedWith("Liquidity exceeds maximum allowed percentage");
});
});

Tools Used

Hardhat

Recommendations

  1. Implement per-transaction liquidity caps

  2. Add percentage-based liquidity addition limits

  3. Introduce cooldown periods for large liquidity additions

  4. Use time-weighted average price (TWAP) checks

  5. Modify _addLiquidity to include validation:

function _addLiquidity(
bytes32 _poolId,
uint256 _collateralAmount,
address _longRecipient,
address _shortRecipient
) internal {
IDIVA.Pool memory _pool = IDIVA(_diva).getPoolParameters(_poolId);
uint256 maxAllowedLiquidity = _pool.collateralBalance * 10;
require(
_collateralAmount <= maxAllowedLiquidity,
"Liquidity exceeds maximum allowed percentage"
);
​
// Existing implementation...
}
Updates

Lead Judging Commences

bube Lead Judge 5 months ago
Submission Judgement Published
Invalidated
Reason: Non-acceptable severity

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