Thunder Loan
AI First Flight #7
Beginner FriendlyFoundryDeFiOracle
EXP
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Submission Details
Impact: high
Likelihood: high
Invalid

deposit() inflates exchange rate without backing, causing all redeem() calls to revert permanently

viaaiautomation

Root + Impact

Description:

The deposit() function calculates shares based on the current exchange rate, mints those shares to the user, and then calls assetToken.updateExchangeRate() with a calculated fee. However, this fee is entirely unbacked—the actual underlying tokens are not transferred into the AssetToken contract until the very last line. Because the exchange rate is artificially inflated by this fee, the rate permanently becomes greater than 1.0. Later, when a user calls redeem(), the function multiplies their shares by this inflated rate to calculate the payout. This results in the contract attempting to safeTransfer more underlying tokens than it actually holds. The transfer reverts with "ERC20: transfer amount exceeds balance", effectively locking all deposited funds permanently.

// src/protocol/ThunderLoan.sol
function deposit(IERC20 token, uint256 amount) external ... {
// ...
@> uint256 calculatedFee = getCalculatedFee(token, amount);
@> assetToken.updateExchangeRate(calculatedFee);
token.safeTransferFrom(msg.sender, address(assetToken), amount);
}

Risk

Likelihood: High. This is triggered by the first legitimate deposit made by any user, with no attacker action or special conditions required.

Impact: High. The protocol is permanently bricked. All users are unable to redeem their shares, causing a total loss of access to funds for all liquidity providers.

Proof of Concept:

The PoC deposits funds, then attempts to redeem. The redeem reverts because the inflated rate caused the requested transfer amount to exceed the pool balance.

contract PoC is Test {
function testExploit() public {
vm.prank(alice); tl.deposit(token, 500 ether);
vm.prank(alice);
vm.expectRevert("ERC20: transfer amount exceeds balance");
tl.redeem(token, assetToken.balanceOf(alice));
}
}

Recommended Mitigation:

Remove the phantom fee calculation from the deposit path. The exchange rate should only increase when actual yield is generated and transferred to the pool.

assetToken.mint(msg.sender, mintAmount);
- uint256 calculatedFee = getCalculatedFee(token, amount);
- assetToken.updateExchangeRate(calculatedFee);
token.safeTransferFrom(msg.sender, address(assetToken), amount);
Updates

Lead Judging Commences

ai-first-flight-judge Lead Judge about 1 hour ago
Submission Judgement Published
Invalidated
Reason: Incorrect statement

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