Core Contracts

Summary

The contract functions _calculateRWAEmission() and _calculateRAACEmission() return hardcoded, static values for RWA and RAAC emission rates, respectively, rather than dynamically calculating these rates based on protocol tokenomics or external market conditions.

Vulnerability Details

These two functions are intended to compute the monthly emission rate for RWA gauges and the weekly emission rate for RAAC gauges. However, the current implementation returns constant values (i.e., 1000000 * 10**18 for RWA and 250000 * 10**18 for RAAC) without any dynamic adjustment mechanism. This design does not account for changes in market conditions, utilization, or other economic variables that could affect the appropriate emission rate. As a result, the protocol might not properly incentivize or disincentivize certain behaviors in the lending or staking ecosystem, leading to potential economic imbalances.

Impact

By using fixed emission rates:

• Economic Inefficiency: The incentive structure may become misaligned with the actual supply/demand dynamics, potentially causing an oversupply or undersupply of rewards.

• Reduced Flexibility: The protocol loses the ability to adjust emissions in response to market conditions, which is crucial for maintaining a stable and healthy ecosystem over time.

Tools Used

• Manual code review

Recommended Mitigation

• Dynamic Emission Calculation: Replace the hardcoded values with a formula that dynamically calculates emission rates based on key protocol parameters (e.g., current liquidity, utilization rate, market conditions, or governance votes).

• Parameter Configuration: Consider allowing governance or an automated mechanism to update parameters that feed into the emission rate calculation.