Core Contracts

Summary

The RToken minting and burning dynamics are forked from AAVE, and allow these tokens to automatically calculate deposit interests. This is done by scaling and normalizing the amounts to mint and burn based on deposit indexes. The RToken is combined with the DebtToken to allow dynamic calculations of borrowing and deposit rates, however, deposit rates are calculated based on linear interest, whereas borrowings are calculated with compounding interest. Because of this when depositing, borrowing, and repaying, there are scenarios where repayments will be higher than what depositors will take in as interest, which allows for extra RTokens to accumulate in the contract. This is why the protocol has added the transferAccruedDust function to prevent stuck funds. However, this function does not properly carry out scaling and normalization leading to invalid returns.

Vulnerability Details

Let's look at what the calculateDustAmount() function is doing:

First, we take the contract balance, excluding any accrued deposit interests, and then we take the totalSupply, which returns the normalized total supply of RTokens. Scaling the contractBalance and doing the second rayMul on the already normalized amount is incorrect, as it over-inflates the amount. Because of this, the function will never transfer the full dust amount and there will always be leftovers.

Impact

Broken dust withdrawal functionality.

Tools Used

Manual review

Recommendations

Do not double scale the RToken total supply and the curvUSD balance.