Thunder Loan

Description

The exchange rate of an AssetToken represents underlying value per share and should increase only when flash loan fees are collected. ThunderLoan.deposit()
incorrectly calls assetToken.updateExchangeRate(calculatedFee) before the token transfer occurs, treating the deposited amount as if it were a borrowed flash
loan amount generating a real fee.

No fee income actually enters the protocol during a deposit — the amount used to compute calculatedFee is just being deposited, not borrowed. The exchange rate
rises artificially with every deposit, which means each subsequent depositor's mintAmount is divided by a higher-than-true exchange rate, giving them fewer
shares than they are owed.

ThunderLoanUpgraded.deposit() removes this call entirely, confirming it is a known bug.

// ThunderLoan.sol
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);
// @> calculates fee as if amount were a flash loan — it is not
uint256 calculatedFee = getCalculatedFee(token, amount);
// @> exchange rate inflated with no real fee income
assetToken.updateExchangeRate(calculatedFee);
token.safeTransferFrom(msg.sender, address(assetToken), amount);
}

// ThunderLoanUpgraded.sol — correctly fixed:
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);
// @> no updateExchangeRate call — this is the correct behavior
token.safeTransferFrom(msg.sender, address(assetToken), amount);
}

Risk

Likelihood:

• Every call to ThunderLoan.deposit() triggers the inflated exchange rate update — no special conditions required

• The inflation compounds with each deposit, growing worse over time as more LPs deposit

Impact:

• Later depositors receive fewer AssetTokens than their proportional share of the pool, meaning they will redeem less underlying than they deposited

• Early depositors are unfairly enriched at the expense of later depositors, breaking LP fairness guarantees

Proof of Concept

function testDepositUpdatesExchangeRateIncorrectly() public {
vm.prank(thunderLoan.owner());
thunderLoan.setAllowedToken(tokenA, true);
AssetToken assetToken = thunderLoan.getAssetFromToken(tokenA);

  vm.startPrank(liquidityProvider);
  tokenA.mint(liquidityProvider, AMOUNT);                                                                                                                      
  tokenA.approve(address(thunderLoan), AMOUNT);         
  thunderLoan.deposit(tokenA, AMOUNT);                                                                                                                         
  vm.stopPrank();
                                                                                                                                                               
  uint256 rateBefore = assetToken.getExchangeRate();    
  // rateBefore = 1003000000000000000 (already inflated from first deposit)
                                                                                                                                                               
  // Second deposit — no flash loan occurred, exchange rate should not change                                                                                  
  vm.startPrank(attacker);                                                                                                                                     
  tokenA.mint(attacker, AMOUNT);                                                                                                                               
  tokenA.approve(address(thunderLoan), AMOUNT);                                                                                                                
  thunderLoan.deposit(tokenA, AMOUNT);
  vm.stopPrank();                                                                                                                                              
                                                        
  uint256 rateAfter = assetToken.getExchangeRate();
  // rateAfter = 1004506... — increased with zero fee income
  assertGt(rateAfter, rateBefore); // PASSES — rate wrongly inflated                                                                                           

}

Recommended Mitigation

// ThunderLoan.sol
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);
  }

Title: Flash Loan Repayment Check Only Validates Token Balance — deposit() Satisfies It, Letting Attackers Mint Redeemable AssetTokens Instead of Truly Repaying
Impact: High
Scope: …/protocol/ThunderLoan.sol