Thunder Loan
AI First Flight #7
Beginner FriendlyFoundryDeFiOracle
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Submission Details
Severity: high
Valid

### [H-#] Erroneous `ThunderLoan::updateExchangeRate` in the `deposit` function causes protocol to think it has more fees than it really does, which blocks redemption and incorrectly sets the exhange rate

stash21x

Description In the ThunderLoan system, the exchangeRate is responsible for calculating the exchange rate between assetTokens & underlying tokens. In a way, it's responsible for keeping track of how many fees to give to liquidity providers.

However, the deposit function updates this rate, without collecting any fees! This update should be removed.

function deposit(IERC20 token, uint256 amount) external revertIfZero(amount) revertIfNotAllowedToken(token) {
AssetToken assetToken = s_tokenToAssetToken[token];
uint256 exchangeRate = assetToken.getExchangeRate();
uint256 mintAmount = (amount * assetToken.EXCHANGE_RATE_PRECISION()) / exchangeRate;
emit Deposit(msg.sender, token, amount);
assetToken.mint(msg.sender, mintAmount);
// @audit-high
@> uint256 calculatedFee = getCalculatedFee(token, amount);
@> assetToken.updateExchangeRate(calculatedFee);
​
// e when a liquidity provider deposits, the $ sits in the assetToken contract
token.safeTransferFrom(msg.sender, address(assetToken), amount);
}

Impact There are several impacts to this bug.

  1. The redeem function is blocked, because the protocol thinks the owed tokens is more than it has

  2. Rewards are incorrectly calculated, leading to users potentially getting way more or less than deserved.

Proof Of Concept:

  1. LP deposits

  2. User takes out a flash loan

  3. Now it is impossible for LP to redeem.

Proof Of Code

Place the following into ThunderLoanTest.t.sol

function testRedeemAfterLoan() public setAllowedToken hasDeposits {
uint256 amountToBorrow = AMOUNT * 10;
uint256 calculatedFee = thunderLoan.getCalculatedFee(tokenA, amountToBorrow);
​
vm.startPrank(user);
tokenA.mint(address(mockFlashLoanReceiver), calculatedFee); // fee?
thunderLoan.flashloan(address(mockFlashLoanReceiver), tokenA, amountToBorrow, "");
vm.stopPrank();
​
uint256 amountToRedeem = type(uint256).max;
vm.startPrank(liquidityProvider);
thunderLoan.redeem(tokenA, amountToRedeem);
}

Recommended Mitigation: Removed the incorrectly updated exchange rate lines from deposit.

function deposit(IERC20 token, uint256 amount) external revertIfZero(amount) revertIfNotAllowedToken(token) {
AssetToken assetToken = s_tokenToAssetToken[token];
uint256 exchangeRate = assetToken.getExchangeRate();
uint256 mintAmount = (amount * assetToken.EXCHANGE_RATE_PRECISION()) / exchangeRate;
emit Deposit(msg.sender, token, amount);
assetToken.mint(msg.sender, mintAmount);
// @audit-high
- uint256 calculatedFee = getCalculatedFee(token, amount);
- assetToken.updateExchangeRate(calculatedFee);
​
// e when a liquidity provider deposits, the $ sits in the assetToken contract
token.safeTransferFrom(msg.sender, address(assetToken), amount);
}

[M-2] Using TSwap as price oracle leads to price and oracle manipulation attacks

Description: The TSwap protocol is a constant product formula based AMM (automated market maker). The price of a token is determined by how many reserves are on the either side of the pool. Because of this, it is easy for malicious users to manipulate the price of a token by buying or selling a large amount of the token in the same transaction, essentially ignoring protocol fees.

Impact: Liquidity providers will drastically reduce fees for providing liquidity.

Proof Of Concept:

The following all happens in 1 transaction.

  1. User takes a flash loan from ThunderLoan for 1000 tokenA. They are charged the original fee fee1. During the flash loan they do the following:

    1. User sells 1000 tokenA, tanking the price.

    2. Instead of repaying right away, the user takes out another flash loan for another 1000 tokenA.

function getPriceInWeth(address token) public view returns (uint256) {
address swapPoolOfToken = IPoolFactory(s_poolFactory).getPool(token);
@> return ITSwapPool(swapPoolOfToken).getPriceOfOnePoolTokenInWeth();
}

  1. The user then repays the first flash loan, and then repays the second flash loan.

Recommended Mitigation: Consider using a different price oracle mechanism, like a Chainlink price feed with a Uniswap TSWAP price fallback oracle.

[H-#] mixing up variable location causes storage collisions ThunderLoan::s_flashLoanFee and ThunderLoan::s_currentlyFlashLoaning, freezing protocol

Description: ThunderLoan.sol has two variables in the following order:

uint256 private s_feePrecision;
uint256 private s_flashLoanFee; // 0.3% ETH fee

However, the upgraded contract ThunderLoanUpgraded.sol has them in a different order:

uint256 private s_flashLoanFee; // 0.3% ETH fee
uint256 public constant FEE_PRECISION = 1e18;

Due to how solidity works, after the upgrade the s_flashLoanFee will have the value of s_feePrecision. You cannot adjust the position of the storage variables, and removing storage variables for constant variables, breaks the storage the storage locations as well.

Impact: After the upgrade, the s_flashLoanFee will have the value of s_feePrecision. This means that users who take out flash loans right after an upgrade will be charged the wrong fee.

More importantly the s_currentlyFlashLoaning mapping with storage in the wrong storage slot.

Proof Of Concept:

PoC

Place the following into ThunderLoanTest.t.sol.

import { ThunderLoanUpgraded } from "../../src/upgradedProtocol/ThunderLoanUpgraded.sol";
.
.
.
function testUpgradeBreaks() public {
uint256 feeBeforeUpgrade = thunderLoan.getFee();
vm.startPrank(thunderLoan.owner());
ThunderLoanUpgraded upgraded = new ThunderLoanUpgraded();
thunderLoan.upgradeToAndCall(address(upgraded), "");
uint256 feeAfterUpgrade = thunderLoan.getFee();
vm.stopPrank();
​
console2.log("Fee Before: ", feeBeforeUpgrade);
console2.log("Fee After: ", feeAfterUpgrade);
​
assert(feeBeforeUpgrade != feeAfterUpgrade);
}

You can also see the storage layout difference by running forge inspect ThunderLoan storage and forge inspect ThunderLoanUpgraded storage

Recommended Mitigation: If you must remove the storage variable, leave it as blank to not mess up the storage slots.

- uint256 private s_flashLoanFee; // 0.3% ETH fee
- uint256 public constant FEE_PRECISION = 1e18;
+ uint256 private s_blank;
+ uint256 private s_flashLoanFee; // 0.3% ETH fee
+ uint256 public constant FEE_PRECISION = 1e18;
Updates

Lead Judging Commences

ai-first-flight-judge Lead Judge 28 minutes ago
Submission Judgement Published
Validated
Assigned finding tags:

[H-02] Updating exchange rate on token deposit will inflate asset token's exchange rate faster than expected

# Summary Exchange rate for asset token is updated on deposit. This means users can deposit (which will increase exchange rate), and then immediately withdraw more underlying tokens than they deposited. # Details Per documentation: > Liquidity providers can deposit assets into ThunderLoan and be given AssetTokens in return. **These AssetTokens gain interest over time depending on how often people take out flash loans!** Asset tokens gain interest when people take out flash loans with the underlying tokens. In current version of ThunderLoan, exchange rate is also updated when user deposits underlying tokens. This does not match with documentation and will end up causing exchange rate to increase on deposit. This will allow anyone who deposits to immediately withdraw and get more tokens back than they deposited. Underlying of any asset token can be completely drained in this manner. # Filename `src/protocol/ThunderLoan.sol` # Permalinks https://github.com/Cyfrin/2023-11-Thunder-Loan/blob/8539c83865eb0d6149e4d70f37a35d9e72ac7404/src/protocol/ThunderLoan.sol#L153-L154 # Impact Users can deposit and immediately withdraw more funds. Since exchange rate is increased on deposit, they will withdraw more funds then they deposited without any flash loans being taken at all. # Recommendations It is recommended to not update exchange rate on deposits and updated it only when flash loans are taken, as per documentation. ```diff function deposit(IERC20 token, uint256 amount) external revertIfZero(amount) revertIfNotAllowedToken(token) { AssetToken assetToken = s_tokenToAssetToken[token]; uint256 exchangeRate = assetToken.getExchangeRate(); uint256 mintAmount = (amount * assetToken.EXCHANGE_RATE_PRECISION()) / exchangeRate; emit Deposit(msg.sender, token, amount); assetToken.mint(msg.sender, mintAmount); - uint256 calculatedFee = getCalculatedFee(token, amount); - assetToken.updateExchangeRate(calculatedFee); token.safeTransferFrom(msg.sender, address(assetToken), amount); } ``` # POC ```solidity function testExchangeRateUpdatedOnDeposit() public setAllowedToken { tokenA.mint(liquidityProvider, AMOUNT); tokenA.mint(user, AMOUNT); // deposit some tokenA into ThunderLoan vm.startPrank(liquidityProvider); tokenA.approve(address(thunderLoan), AMOUNT); thunderLoan.deposit(tokenA, AMOUNT); vm.stopPrank(); // another user also makes a deposit vm.startPrank(user); tokenA.approve(address(thunderLoan), AMOUNT); thunderLoan.deposit(tokenA, AMOUNT); vm.stopPrank(); AssetToken assetToken = thunderLoan.getAssetFromToken(tokenA); // after a deposit, asset token's exchange rate has aleady increased // this is only supposed to happen when users take flash loans with underlying assertGt(assetToken.getExchangeRate(), 1 * assetToken.EXCHANGE_RATE_PRECISION()); // now liquidityProvider withdraws and gets more back because exchange // rate is increased but no flash loans were taken out yet // repeatedly doing this could drain all underlying for any asset token vm.startPrank(liquidityProvider); thunderLoan.redeem(tokenA, assetToken.balanceOf(liquidityProvider)); vm.stopPrank(); assertGt(tokenA.balanceOf(liquidityProvider), AMOUNT); } ```

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