Panoptic - JecikPo's results

Lines of code

https://github.com/code-423n4/2024-04-panoptic/blob/833312ebd600665b577fbd9c03ffa0daf250ed24/contracts/PanopticPool.sol#L1635

Vulnerability details

Impact

When PanopticPool.settleLongPremium() is called it supposed to change the accounting of the shares on the CollateralTracker so that the long holders` shares (based on the calculated premium) are burned. Instead due to incorrect sign they are minted.

Proof of Concept

The settleLongPremium() function calculates the would-be-accumulated premium for a long option based on the premiumAccumulatorX obtained through SFPM.getAccountPremium(). Those accumulators are then adjusted by the s_options[owner][tokenId][legIndex] value which holds the last used accumulators. The difference is multiplied by the liquidity:

            LeftRightSigned realizedPremia = LeftRightSigned
                .wrap(0)
                .toRightSlot(int128(int256((accumulatedPremium.rightSlot() * liquidity) / 2 ** 64)))
                .toLeftSlot(int128(int256((accumulatedPremium.leftSlot() * liquidity) / 2 ** 64)));

This realizedPremia is then used to exercise is on each CollateralToken using s_collateralTokenX.exercise().

The problem is that it is a positive value, and the positive value on exercise() will cause the shares to be minted instead of burned, because exercise() reverts the sign:

int256 tokenToPay = -realizedPremium;

Then the following happens:

           } else if (tokenToPay < 0) {
                // if user must receive tokens, mint them
                uint256 sharesToMint = convertToShares(uint256(-tokenToPay));
                _mint(optionOwner, sharesToMint);
            }

Tools Used

Manual Review

Recommended Mitigation Steps

The realizedPremium should be coming to the exercise() as negative:

PanopticPool.sol:

-            s_collateralToken0.exercise(owner, 0, 0, 0, realizedPremia.rightSlot());
-            s_collateralToken1.exercise(owner, 0, 0, 0, realizedPremia.leftSlot());
+            s_collateralToken0.exercise(owner, 0, 0, 0, -realizedPremia.rightSlot());
+            s_collateralToken1.exercise(owner, 0, 0, 0, -realizedPremia.leftSlot());

Assessed type

Math