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

Using `RAACToken::_transfer()` in `RAACToken::burn()` leads to double tax application

davide

Summary

The RAACToken::burn() function applies the burn tax rate twice - once explicitly in the burn function and once implicitly through the RAACToken::_transfer() call to the fee collector. This results in the fee collector receiving less than the intended tax amount and more being effectively burned.

Vulnerability Details

The RAACToken::burn() function first calculates and applies the burn tax:

function burn(uint256 amount) external {
uint256 taxAmount = amount.percentMul(burnTaxRate);
_burn(msg.sender, amount - taxAmount);
if (taxAmount > 0 && feeCollector != address(0)) {
@> _transfer(msg.sender, feeCollector, taxAmount);
}
}

However, the RAACToken::_transfer() call to send the tax to the fee collector internally calls RAACToken::_update(), which applies the tax rates again:

function _update(address from, address to, uint256 amount) internal virtual override {
uint256 baseTax = swapTaxRate + burnTaxRate;
// Skip tax for whitelisted addresses or when fee collector disabled
if (baseTax == 0 || from == address(0) || to == address(0) ||
whitelistAddress[from] || whitelistAddress[to] ||
feeCollector == address(0)) {
super._update(from, to, amount);
return;
}
​
// All other cases where tax is applied
uint256 totalTax = amount.percentMul(baseTax);
uint256 burnAmount = totalTax * burnTaxRate / baseTax;
super._update(from, feeCollector, totalTax - burnAmount);
super._update(from, address(0), burnAmount);
super._update(from, to, amount - totalTax);
}

Impact

When transferring the burn tax to the fee collector, the transfer itself is taxed again, causing the fee collector to receive less than intended.
The likelihood is HIGH because it will happen on every burn operation.
The impact is MEDIUM because while it consistently affects protocol revenue, it does not pose a direct risk to user funds or core protocol functionality.

Tools Used

  • Manual review

Recommendations

Use super._update() instead of _transfer() in the burn() function to avoid the double tax calculation:

function burn(uint256 amount) external {
uint256 taxAmount = amount.percentMul(burnTaxRate);
_burn(msg.sender, amount - taxAmount);
if (taxAmount > 0 && feeCollector != address(0)) {
- _transfer(msg.sender, feeCollector, taxAmount);
+ super._update(msg.sender, feeCollector, taxAmount);
}
}

This ensures that tax is only applied once during burns, maintaining the intended tax rate.

Updates

Lead Judging Commences

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

RAACToken::burn applies burn tax twice when transferring to feeCollector, causing excess tokens to be burned and reduced fees to be collected

This is by design, sponsor's words: Yes, burnt amount, done by whitelisted contract or not always occur the tax. The feeCollector is intended to always be whitelisted and the address(0) is included in the _transfer as a bypass of the tax amount, so upon burn->_burn->_update it would have not applied (and would also do another burn...). For this reason, to always apply such tax, the burn function include the calculation (the 2 lines that applies) and a direct transfer to feeCollector a little bit later. This is done purposefully

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

RAACToken::burn applies burn tax twice when transferring to feeCollector, causing excess tokens to be burned and reduced fees to be collected

This is by design, sponsor's words: Yes, burnt amount, done by whitelisted contract or not always occur the tax. The feeCollector is intended to always be whitelisted and the address(0) is included in the _transfer as a bypass of the tax amount, so upon burn->_burn->_update it would have not applied (and would also do another burn...). For this reason, to always apply such tax, the burn function include the calculation (the 2 lines that applies) and a direct transfer to feeCollector a little bit later. This is done purposefully

Appeal created

inallhonesty Lead Judge 6 months ago
Submission Judgement Published
Invalidated
Reason: Non-acceptable severity
Assigned finding tags:

RAACToken::burn applies burn tax twice when transferring to feeCollector, causing excess tokens to be burned and reduced fees to be collected

This is by design, sponsor's words: Yes, burnt amount, done by whitelisted contract or not always occur the tax. The feeCollector is intended to always be whitelisted and the address(0) is included in the _transfer as a bypass of the tax amount, so upon burn->_burn->_update it would have not applied (and would also do another burn...). For this reason, to always apply such tax, the burn function include the calculation (the 2 lines that applies) and a direct transfer to feeCollector a little bit later. This is done purposefully

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