Lines of code

Vulnerability details

Impact

_updateTWAV can be flash loaned. Hacker may pay the flash loan fee for 4 blocks then execute the attack after that.

Proof of Concept

    function _updateTWAV(uint256 _valuation, uint32 _blockTimestamp) internal {
        uint32 _timeElapsed; 
        unchecked {
            _timeElapsed = _blockTimestamp - lastBlockTimeStamp;
        }

        uint256 _prevCumulativeValuation = twavObservations[((twavObservationsIndex + TWAV_BLOCK_NUMBERS) - 1) % TWAV_BLOCK_NUMBERS].cumulativeValuation;
        twavObservations[twavObservationsIndex] = TwavObservation(_blockTimestamp, _prevCumulativeValuation + (_valuation * _timeElapsed)); //add the previous observation to make it cumulative
        twavObservationsIndex = (twavObservationsIndex + 1) % TWAV_BLOCK_NUMBERS;
        lastBlockTimeStamp = _blockTimestamp;
    }

Focus here twavObservations[twavObservationsIndex] = TwavObservation(_blockTimestamp, _prevCumulativeValuation + (_valuation * _timeElapsed)); //add the previous observation to make it cumulative

Follow this process:

1. Attacker flash loan and drive the _valuation to the moon
2. twavObservations[0] is calculated for _valuation that is already moon, so twavObservations[0] is also moon.
3. Attacker dump back and repay the flash loan fee. In this part,
4. Repeat for 4 blocks, so twavObservations[0], twavObservations[1], twavObservations[2], twavObservations[3] is all moon
5. Now do anything related to flash loan attack as all twavObservations are already moon, _getTwav() will return manipulated price that is very moon.

Cost required to attack

With TWAP window of 4 block, hacker may need to flash loan at most 1000M USD for 4 blocks to move the price of WETH in 0.3% fee uniswapv3 pool up 90%.

Flash loan and swapping has around 0.2% fee, hacker lost 2M/block for 4 blocks = 8M

But hacking reward may be greater than this (In case of large pool for example WETH/USDC)

For lower liquidity pair, cost is far less than this.

Tools Used

Manual. And some calculation

Recommended Mitigation Steps

TWAV should span more than 4 blocks, more blocks, it cost more money for rich attacker. Attacker may broke before attack got successful.

Some calculation research here: <https://blog.euler.finance/uniswap-oracle-attack-simulator-42d18adf65af&gt;

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