SSSwap
First Flight #41
Beginner FriendlyRust
100 EXP
View results
Previous Next
Submission Details
Impact: medium
Likelihood: medium
Invalid

No Protocol Fee Mechanism inside the `swap_operations::swap_exact_in` function

mishraji874

Description: The AMM lacks a protocol fee mechanism, limiting sustainability and governance capabilities. The AMM implements a 0.3% fee for liquidity providers but lacks a protocol fee mechanism that could be used for treasury, buybacks, or other protocol sustainability measures. This is a medium severity issue as it limits the protocol's long-term sustainability and governance capabilities.

Impact:

  1. Limited protocol sustainability without fee revenue

  2. Reduced governance capabilities

  3. Missed opportunity for protocol value accrual

Proof of Concept: In the current implementation, all fees go to liquidity providers:

// Current fee calculation
let lp_fees = (amount_out as u128 * 3).
div_floor(&1000) as u64;
amount_out = amount_out - lp_fees;
// No protocol fee is taken

Recommended Mitigation: Implement a protocol fee mechanism with governance control:

// Add to state/liquidity_pool.rs
#[account]
#[derive(InitSpace)]
pub struct LiquidityPool {
pub token_a: Pubkey,
pub token_b: Pubkey,
pub lp_mint: Pubkey,
pub bump: u8,
pub protocol_fee_numerator:
u64, // e.g., 1 for 0.1% fee
pub protocol_fee_denominator:
u64, // e.g., 1000
pub fee_recipient: Pubkey,
}
​
// Then in swap_operations.rs
pub fn swap_exact_in(context:
Context<SwapContext>, amount_in: u64,
min_out: u64, zero_for_one: bool) ->
Result<()> {
// Existing code...
let mut amount_out: u64 = numerator.
div_floor(&denominator) as u64;
// Calculate total fee (0.3%)
let total_fee = (amount_out as u128
* 3).div_floor(&1000) as u64;
// Split between LP and protocol if
protocol fee is enabled
let protocol_fee = if context.
accounts.liquidity_pool.
protocol_fee_numerator > 0 {
(total_fee as u128 * context.
accounts.liquidity_pool.
protocol_fee_numerator as u128)
.div_floor(&context.
accounts.liquidity_pool.
protocol_fee_denominator as
u128) as u64
} else {
0
};
let lp_fee = total_fee -
protocol_fee;
amount_out = amount_out - total_fee;
// If protocol fee is non-zero,
transfer to fee recipient
if protocol_fee > 0 {
// Transfer protocol fee to
recipient
// Implementation depends on
whether fee is taken in
token_in or token_out
}
// Rest of function...
Ok(())
}
Updates

Lead Judging Commences

0xtimefliez Lead Judge 12 days ago
Submission Judgement Published
Invalidated
Reason: Design choice

Support

FAQs

Can't find an answer? Chat with us on Discord, Twitter or Linkedin.