Liquidity Management

Summary

Precision loss in VaultReader.sol due to the use of fixed-point arithmetic and division operations in calculations. Improper handling of these scaling factors or division operations can lead to rounding errors, which compound over time and result in incorrect calculations.

Vulnerability Details

Division in expectedSizeInTokensDelta

• If prices.indexTokenPrice.min is large, the division will truncate the result, leading to a loss of precision.

• For example, if sizeDeltaInUsd = 100 and prices.indexTokenPrice.min = 3, the result will be 33 instead of 33.333....

Multiplication and Division in priceImpactInCollateralTokens

• If priceImpactInTokens is small and prices.shortTokenPrice.min is large, the division will truncate the result, leading to precision loss.

• For example, if priceImpactInTokens = 1, prices.indexTokenPrice.min = 1000, and prices.shortTokenPrice.min = 3, the result will be 333 instead of 333.333....

Impact

• Precision loss can lead to incorrect calculations of the price impact in collateral tokens.

• Liquidity providers may suffer losses if the price impact is underestimated or overestimated.

• Precision loss can erode user trust in the system.

Tools Used

Manual code review

Recommendations

• Increase the precision scaling factor ( 1e36 instead of 1e30) to reduce the impact of rounding errors.

• Perform division operations as late as possible in calculations to minimize precision loss.

• Implement rounding functions to ensure that results are rounded appropriately (e.g., rounding up or down based on the context).