Part 2

Summary

external/
└── market-making/
└── branches/
└── StabilityBranch.sol

Three medium-severity issues were found, concerning front-running risks, gas inefficiencies, and external dependency risks. These may not cause immediate fund loss but could lead to financial manipulation, high gas costs, or system instability.

Vulnerability Details

1. Front-Running in initiateSwap

• Description: The initiateSwap function is susceptible to front-running attacks, where malicious actors can observe pending transactions and manipulate prices before they are executed.

• Code Affected: initiateSwap.

2. Gas Limit Issues

• Description: Functions such as initiateSwap and fulfillSwap perform multiple state updates and external calls, which could lead to transactions running out of gas.

• Code Affected: initiateSwap, fulfillSwap.

3. Dependency Risks

• Description: The contract depends on external libraries (Vault, Collateral, UsdTokenSwapConfig). If these dependencies are compromised or updated incorrectly, the contract’s security could be impacted.

• Code Affected: All external library imports.

Impact

• Potential front-running exploits leading to manipulated swaps.

• Gas inefficiencies causing transaction failures.

• Risk of external contract vulnerabilities affecting functionality.

Tools Used

• Manual Review: Assessed gas consumption patterns.

• Slither: Identified front-running opportunities.

Recommendations

1. Implement commit-reveal schemes or minimum execution delays to mitigate front-running.

2. Optimize gas usage by batching state changes and caching storage variables.

3. Regularly audit external dependencies and verify their integrity.