Core Contracts

Summary

The _initializeFeeTypes function is responsible for setting default fee distributions for various protocol operations. However, an issue has been identified where Fee Type 6 and 7 were not capped at 100% during initialization, while the updateFeeType function enforces strict validation requiring fee distributions to sum to 100% (BASIS_POINTS). This inconsistency forces Fee Type 6 and 7 to be set at 100% when updated, which may not align with their intended design.

Vulnerability Details

1. Fee Type 6 and 7 Not Capped at 100% in Initialization

   • In _initializeFeeTypes, Fee Type 6 and 7 were set with a total distribution of 2% rather than 100%.

   • This discrepancy does not trigger any validation during contract deployment since _initializeFeeTypes lacks a validation check.

2. Strict Validation in updateFeeType Enforces a 100% Cap

   • The updateFeeType function enforces that all fee shares must sum to 100%.

   • Since Fee Type 6 and 7 were initialized with a sum of 2%, any attempt to update them forces a change to 100%, which alters the original allocation logic.

3. Potential Issues

   • The enforced 100% requirement on updates might misalign with the protocol's intended fee distribution for Fee Type 6 and 7.

   • If Fee Type 6 and 7 are meant to represent a fraction of an external fee structure (e.g., 2% of a transaction rather than 100% of an internal allocation), the update function’s strict validation prevents maintaining their proportional structure.

   • This inconsistency can cause confusion for developers and auditors reviewing the contract logic.

Impact

• Governance will be forced to set Fee Type 6 and 7 at 100% during updates, which may not reflect their intended distribution.

• Unexpected contract behavior could arise if Fee Type 6 and 7 are adjusted incorrectly due to the enforced 100% validation.

• The inconsistency between initialization and update logic could lead to governance and operational challenges.

Tools Used

• Manual code review

Recommendations

Ensure Fee Type 6 and 7 Maintain Their Intended Proportional Allocation

• Modify _initializeFeeTypes to either set Fee Type 6 and 7 at 100% or establish a separate validation rule for proportionally allocated fees.