Liquidity Management

Summary

The _totalAmount function suffers from precision loss due to integer division in Solidity. When converting the indexToken balance and positionData.netValue into collateral token units, the calculations involve division by prices.shortTokenPrice.min. However, Solidity truncates decimal values instead of rounding them, leading to a gradual loss of value over multiple transaction.

Vulnerability Details

• The multiplication of indexToken balance and prices.indexTokenPrice.min is performed before division by prices.shortTokenPrice.min.

• Solidity truncates the result instead of rounding it, leading to a slight loss of precision accumulating overtime anytime totalAmount function is called.

• The same issue occurs when dividing positionData.netValue by prices.shortTokenPrice.min.

Scenario:

• Vault holds indexToken: 500,000 ETH

• Vault holds collateralToken: $2,000,000 USDC
  Open position net value (positionData.netValue): $3,000,000

• ETH Price
  (prices.indexTokenPrice.min): $1,750

• Collateral Token Price (prices.shortTokenPrice.min): $1.2

  Step 1:

Convert indexToken Balance to Collateral Units

Step 2:

Step 3:

No loss in this step, as the values divide evenly.

Step 4:

Analysis:

• Expected: 733,666,666.67

• Actual: 733,666,666

• Precision lost: 0.67 per transaction
  Imagine 1,000 transaction per day * 356 a year
  = 356,000 transaction in a year
  0.67 * 356,000 = $238,520 lost over time

Impact

Over time, vault users lose significant funds due to precision loss, causing inaccurate NAV calculations and unexpected liquidation risks.

Tools Used

Manual Review

Recommendations

To prevent precision loss, multiply by 1e30 before division and scale back after: