Caviar contest - Chom's results

Lines of code

https://github.com/code-423n4/2022-12-caviar/blob/0212f9dc3b6a418803dbfacda0e340e059b8aae2/src/Pair.sol#L63-L99 https://github.com/code-423n4/2022-12-caviar/blob/0212f9dc3b6a418803dbfacda0e340e059b8aae2/src/Pair.sol#L417-L428

Vulnerability details

Impact

Add liquidity may pull tokens from the user more than necessary. These extra tokens pulled become profit to previous LP holders.

Proof of Concept

        // *** Effects *** //

        // transfer fractional tokens in
        _transferFrom(msg.sender, address(this), fractionalTokenAmount);

        // *** Interactions *** //

        // mint lp tokens to sender
        lpToken.mint(msg.sender, lpTokenAmount);

        // transfer base tokens in if the base token is not ETH
        if (baseToken != address(0)) {
            // transfer base tokens in
            ERC20(baseToken).safeTransferFrom(msg.sender, address(this), baseTokenAmount);
        }

Assume price is 1:1 and you input baseTokenAmount = 100, fractionalTokenAmount = 1

    function addQuote(uint256 baseTokenAmount, uint256 fractionalTokenAmount) public view returns (uint256) {
        uint256 lpTokenSupply = lpToken.totalSupply();
        if (lpTokenSupply > 0) {
            // calculate amount of lp tokens as a fraction of existing reserves
            uint256 baseTokenShare = (baseTokenAmount * lpTokenSupply) / baseTokenReserves();
            uint256 fractionalTokenShare = (fractionalTokenAmount * lpTokenSupply) / fractionalTokenReserves();
            return Math.min(baseTokenShare, fractionalTokenShare);
        } else {
            // if there is no liquidity then init
            return Math.sqrt(baseTokenAmount * fractionalTokenAmount);
        }
    }

addQuote will return fractionalTokenShare, which represents the share of 1 fractional token : 1 base token

ERC20(baseToken).safeTransferFrom(msg.sender, address(this), baseTokenAmount);

But 100 base token has been pulled. This resulted in the loss of 99 base tokens as LP minted only represented 1 base token.

Recommended Mitigation Steps

Return actual base token and fractional token amount from the addQuote function and only pull what necessary.