Core Contracts

Summary

The RToken contract stores user balances in a scaled form based on a liquidity index but fails to correctly adjust the reported balances in its balanceOf and totalSupply functions. As a result, users see significantly lower balances than expected, which can lead to incorrect fund distributions during withdrawals.

Vulnerability Details

The RToken contract is designed to store balances in a scaled form using a liquidity index. In the _update function, the amount is scaled by dividing by the current normalized income:

Then, the balanceOf and totalSupply functions should convert the stored scaled values back to actual balances by multiplying by the current liquidity index:

Due to an implementation error, the actual adjustments are not being correctly applied. Consequently, users see the raw scaled balances rather than the properly adjusted actual balances.

Proof-of-Concept (PoC)

1. Initial Deposit:

   • A user deposits 100 crvUSD when the liquidity index is 1e27 (RAY).

   • The _update function scales the amount as follows:

     scaledAmount = 100e18 / 1e27 = 100 / 1e9 = 1e-7 (scaled units)

   • Expected Behavior:
     The actual balance should be recovered by multiplying the scaled balance by the liquidity index:

     balance = 1e-7 * 1e27 = 100e18 (i.e., 100 tokens)

   • Actual Behavior:
     Due to missing or incorrect index adjustment, balanceOf(user) erroneously returns approximately 1e-7 tokens, which is far lower than the expected 100 tokens.

2. Index Increase:

   • Later, the liquidity index increases to 1.1e27.

   • Expected Actual Balance:

     balance = 1e-7 * 1.1e27 = 110e18 tokens (110 tokens)

   • Actual Behavior:
     The system still reports the balance as the raw scaled value (≈1e-7 tokens), ignoring the updated liquidity index.

3. Withdrawal Attempt:

   • When the user attempts to withdraw tokens, the incorrect balance causes the system to miscalculate the withdrawal amount, leading to significant underpayment.

Impact

Users see drastically lower token balances than they should, leading to potential financial losses during withdrawals.

Tools Used

Manual Review

Recommendations

Ensure that the balanceOf and totalSupply functions properly apply the liquidity index when converting stored scaled balances to actual balances. Verify the implementation of rayDiv and rayMul functions and ensure they are used consistently in all balance-related operations. The intended functions should look like this: