Timeswap contest - 0Kage's results

Lines of code

https://github.com/code-423n4/2023-01-timeswap/blob/ef4c84fb8535aad8abd6b67cc45d994337ec4514/packages/v2-pool/src/structs/Pool.sol#L302 https://github.com/code-423n4/2023-01-timeswap/blob/ef4c84fb8535aad8abd6b67cc45d994337ec4514/packages/v2-pool/src/structs/LiquidityPosition.sol#L60

Vulnerability details

Impact

When a LP mints V2 Pool tokens, mint function in PoolLibrary gets called. Inside this function, updateDurationWeightBeforeMaturity updates global short, long0 and long1 fee growth.

Change in global fee growth necessitates an update to LiquidityPosition state of caller (specifically updating fees & fee growth rates) when there are state changes made to that position (in this case, increasing liquidity). This principle is followed in functions such as burn, transferLiquidity, transferFees. However when calling mint, this update is missing. As a result, growth & fee levels in liquidity position of caller are inconsistent with global fee growth rates.

Inconsistent state leads to incorrect calculations of long0/long1 and short fees of LP holders which inturn can lead to loss of fees. Since this impacts actual rewards for users, I've marked it as MEDIUM risk

Proof of Concept

Let's say, Bob has following sequence of events

• MINT at T0: Bob is a LP who mints N pool tokens at T0

• MINT at T1: Bob mints another M pool tokens at T1. At this point, had the protocol correctly updated fees before minting new pool tokens, Bob's fees & growth rate would be a function of current liquidity (N), global updated short fee growth rate at t1 (s_t1) and Bob's previous growth rate at t_0 (b_t0)

• BURN at T2: Bob burns N + M tokens at T2. At this point, Bob's fees should be a function of previous liquidity (N+M), global short fee growth rate (s_t2) and Bob's previous growth rate at t_1(b_t1) -> since this update never happened, Bob's previous growth rate is wrongly referenced b_t0 instead of b_t1.

Bob could collect a lower fees because of this state inconsistency

Tools Used

Recommended Mitigation Steps

Update the liquidity position state right before minting.

After line 302 of Pool.sol, update the LiquidityPosition by adding

  liquidityPosition.update(pool.long0FeeGrowth, pool.long1FeeGrowth, pool.shortFeeGrowth);