Liquidity Management

Summary

This audit report revisits the slippage swap vulnerability identified in the PerpetualVault contract. Previously, the _doDexSwap function calculated the output token amount based on balance differences without enforcing a minimum acceptable amount. The new recommendation introduces a minimum output check to ensure that if the swap returns fewer tokens than expected, the transaction will revert. This update greatly enhances the safety of swap operations and protects user funds from excessive slippage.

Vulnerability Details

• Lack of Minimum Output Check:
  The original implementation of _doDexSwap only measured the difference in token balances before and after the swap. It did not verify whether the amount received met a minimum expected threshold, leaving the contract vulnerable to adverse market conditions or malicious manipulation.

• Potential Exploit Scenario:
  An attacker or a sudden market movement could force a swap to yield significantly fewer tokens than anticipated. Without a proper check, the contract would proceed with the transaction, potentially causing a loss of user funds.

Impact

• User Fund Loss:
  Accepting a swap with a lower-than-expected output could result in substantial financial losses for users.

• Exposure to Manipulation:
  The absence of slippage protection increases the risk of front-running or other exploitative strategies that target the contract's swap mechanism.

• Compromised Contract Integrity:
  Continued operation without slippage safeguards can undermine user trust and the overall financial stability of the vault.

Tools Used

• Manual Code Review:
  A detailed review of the contract’s swap functionality identified the missing minimum output check.

Recommendations

To mitigate the identified risk, update the _doDexSwap function to include a minimum output parameter check. This change requires the swap data to provide a minimum expected output value, which is then compared against the actual output obtained from the swap. If the actual output is less than the minimum, the transaction reverts. Below is an example implementation:

Benefits of This Change

• Enhanced Safety:
  The minimum output parameter ensures that the swap will only proceed if it meets the expected threshold, protecting against adverse price movements.

• Prevention of Undesirable Swaps:
  Reverting the transaction when slippage exceeds acceptable limits prevents potential loss of funds.

• Consistent Security Practices:
  Incorporating explicit checks in swap operations aligns with best practices for decentralized finance (DeFi) contracts.