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

Lack of L2 sequencer check can cause Zeno bond issuers to get less funds than what they anticipated

minusone

Summary

Lack of L2 sequencer check can cause Zeno bond issuers to get less funds than what they anticiapted

Vulnerability Details

In the Auction contract, the following buy function allows a user to purchse Zeno bonds in exchange for USDC tokens during a Dutch auction, where the price decreases over time

/**
Bid on the ZENO auction
User will able to buy ZENO tokens in exchange for USDC
*/
function buy(uint256 amount) external whenActive {
require(amount <= state.totalRemaining, "Not enough ZENO remaining");
uint256 price = getPrice();
uint256 cost = price * amount;
require(usdc.transferFrom(msg.sender, businessAddress, cost), "Transfer failed");
​
bidAmounts[msg.sender] += amount;
state.totalRemaining -= amount;
state.lastBidTime = block.timestamp;
state.lastBidder = msg.sender;
​
zeno.mint(msg.sender, amount);
emit ZENOPurchased(msg.sender, amount, price);
}
​

However, as per the readme, this contract is supposed to be compatible with all EVM blockchains.

This presents an issue where if this contract is deployed on an L2 chain, the lack of a sequencer upcheck can cause Zeno issuers to lose funds if the sequencer is down for a significant amount of time. When an L2 sequencer is down, transactions simply do not get processed.

https://cryptonary.com/the-arbitrum-network-had-an-outage-over-the-weekend/

This can result in potentially disasterous siutations for the issuer. For example, a user could attempt to purchase a bond for 1000 usdc, but due to a sequencer being down for significant amount of time e.g. 30 mins, the transaction doesn't get processed until the sequencer is back online, which at that point, the price of the bond would have dropped from the original price of 1000 usdc, causing the issuer to lose funds

Impact

Loss of funds for the Zeno issuer

Tools Used

Manual Review

Recommendations

Add a check for an active sequencer (e.g. Chainlink's L2 Sequencer Feeds) and consider using block.number for the auction's duration instead of block.timestamp

Updates

Lead Judging Commences

inallhonesty Lead Judge 7 months ago
Submission Judgement Published
Validated
Assigned finding tags:

Protocol lacks L2 sequencer status checks, allowing transactions to execute at a lower price after downtime in Dutch auctions, or consuming stale prices

inallhonesty Lead Judge 7 months ago
Submission Judgement Published
Validated
Assigned finding tags:

Protocol lacks L2 sequencer status checks, allowing transactions to execute at a lower price after downtime in Dutch auctions, or consuming stale prices

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