Core Contracts
Regnum Aurum Acquisition Corp
HardhatReal World AssetsNFT
77,280 USDC
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Submission Details
Severity: high
Valid

`GaugeController` does not send funds to FeeCollector disrupting fees distribution and causing loss of funds

holydevoti0n

Summary

The GaugeController bypasses the FeeCollector contract when distributing revenue, directly sending funds to Gauges and completely losing the performance fees. This breaks the protocol's fee management system, which is designed to have the FeeCollector as the central point for managing and distributing all protocol fees to various stakeholders.

Vulnerability Details

The FeeCollector is designed as the central contract for managing protocol fee collection and distribution to stakeholders including veRAAC holders, treasury, and repair fund. However, the GaugeController's distributeRevenue function:

function distributeRevenue(
GaugeType gaugeType,
uint256 amount
) external onlyRole(EMERGENCY_ADMIN) whenNotPaused {
if (amount == 0) revert InvalidAmount();
uint256 veRAACShare = amount * 80 / 100; // 80% to veRAAC holders
// @audit-issue 1. performance fees calculated but never used.
// @audit-issue 2. performance fees are not tracked
@> uint256 performanceShare = amount * 20 / 100; // 20% performance fee
revenueShares[gaugeType] += veRAACShare;
// @audit-issue 3. bypass FeeCollector by directly distributing 80% to Gauges
_distributeToGauges(gaugeType, veRAACShare);
emit RevenueDistributed(gaugeType, amount, veRAACShare, performanceShare);
}

As we can see in the code above:

  1. Bypasses FeeCollector by directly distributing 80% to Gauges.

  2. Performance fees calculated but never used(should be sent to the FeeCollector)

  3. Performance fees are not tracked(performanceFeesis not used)

Notice that for the performance fees, there is no way to withdraw those funds, which will lead to permanently loss of funds.

This contradicts the FeeCollector's design which should:

  • Collect all protocol fees

  • Manage fee distributions through its configured fee types

  • Ensure proper splitting between stakeholders

  • Track all fee collections and distributions

The implementation meets the documentation, putting FeeCollectorin charge of distributing all the collected fees.

function _processDistributions(uint256 totalFees, uint256[4] memory shares) internal {
uint256 contractBalance = raacToken.balanceOf(address(this));
if (contractBalance < totalFees) revert InsufficientBalance();
​
​
if (shares[0] > 0) {
uint256 totalVeRAACSupply = veRAACToken.getTotalVotingPower();
if (totalVeRAACSupply > 0) {
TimeWeightedAverage.createPeriod(
distributionPeriod,
block.timestamp + 1,
7 days,
shares[0],
totalVeRAACSupply
);
totalDistributed += shares[0];
} else {
shares[3] += shares[0]; // Add to treasury if no veRAAC holders
}
}
​
​
if (shares[1] > 0) raacToken.burn(shares[1]);
if (shares[2] > 0) raacToken.safeTransfer(repairFund, shares[2]);
if (shares[3] > 0) raacToken.safeTransfer(treasury, shares[3]);
}

Impact

  • 20% of all revenue (performance fees) are permanently lost.

  • Broken fee distribution system:

    • FeeCollector loses visibility of revenue flows

    • Fee distributions bypass intended controls and splits

    • No proper tracking of collected fees

    • Stakeholders don't receive their intended share of fees

  • Compromised protocol accounting:

    • Performance fees are not tracked in performanceFees mapping

    • FeeCollector's accounting system becomes unreliable

Tools Used

Manual Review

Recommendations

  1. Ensure all fees go through FeeCollector.

function distributeRevenue(
GaugeType gaugeType,
uint256 amount
) external onlyRole(EMERGENCY_ADMIN) whenNotPaused {
if (amount == 0) revert InvalidAmount();
uint256 veRAACShare = amount * 80 / 100; // 80% to veRAAC holders
uint256 performanceShare = amount * 20 / 100; // 20% performance fee
// ps: constructor should receive feeCollector and give max approval to it.
+ feeCollector.collectFee(performanceShare, 0); // 0 == Protocol Fees
+ feeCollector.collectFee(performanceShare, 2); // 2 == Performance Fees
+ performanceFees[msg.sender] += performanceShare; // Track the fees
revenueShares[gaugeType] += veRAACShare;
- _distributeToGauges(gaugeType, veRAACShare);
emit RevenueDistributed(gaugeType, amount, veRAACShare, performanceShare);
}
Updates

Lead Judging Commences

inallhonesty Lead Judge about 2 months ago
Submission Judgement Published
Validated
Assigned finding tags:

GaugeController.distributeRevenue calculates 20% performance fee but never transfers or allocates it to any recipient, causing loss of funds

inallhonesty Lead Judge about 2 months ago
Submission Judgement Published
Validated
Assigned finding tags:

GaugeController.distributeRevenue calculates 20% performance fee but never transfers or allocates it to any recipient, causing loss of funds

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