Yieldy contest - defsec's results

ISSUE LIST

C4-001: Missing events for only functions that change critical parameters - Non Critical

C4-002 : Critical changes should use two-step procedure - Non Critical

C4-003 : Pragma Version - Non Critical

C4-004 : Missing zero-address check in the setter functions and initiliazers - Low

C4-005 : Low level calls with solidity version 0.8.14 can result in optimiser bug. - LOW

C4-006 : The Contract Should safeApprove(0) first - LOW

C4-007 : Use of Block.timestamp - Non-critical

C4-008 : Incompatibility With Rebasing/Deflationary/Inflationary tokens - LOW

C4-009 : Add disableInitializers to Prevent Front-running - LOW

C4-010 : ERC20 approve method missing return value check - LOW

C4-011 : Token Existing Check Is not Implemented - LOW

ISSUES

C4-001 : Missing events for only functions that change critical parameters

Impact - Non critical

The afunctions that change critical parameters should emit events. Events allow capturing the changed parameters so that off-chain tools/interfaces can register such changes with timelocks that allow users to evaluate them and consider if they would like to engage/exit based on how they perceive the changes as affecting the trustworthiness of the protocol or profitability of the implemented financial services. The alternative of directly querying on-chain contract state for such changes is not considered practical for most users/usages.

Missing events and timelocks do not promote transparency and if such changes immediately affect users’ perception of fairness or trustworthiness, they could exit the protocol causing a reduction in liquidity which could negatively impact protocol TVL and reputation.

Proof of Concept

1. Navigate to the following contract.

https://github.com/code-423n4/2022-06-yieldy/blob/main/src/contracts/Staking.sol#L246

See similar High-severity H03 finding OpenZeppelin’s Audit of Audius (https://blog.openzeppelin.com/audius-contracts-audit/#high) and Medium-severity M01 finding OpenZeppelin’s Audit of UMA Phase 4 (https://blog.openzeppelin.com/uma-audit-phase-4/)

Tools Used

None

Recommended Mitigation Steps

Add events to all functions that change critical parameters.

C4-002 : Critical changes should use two-step procedure

Impact - NON CRITICAL

The critical procedures should be two step process. The contracts inherit OpenZeppelin's OwnableUpgradable contract which enables the onlyOwner role to transfer ownership to another address. It's possible that the onlyOwner role mistakenly transfers ownership to the wrong address, resulting in a loss of the onlyOwner role. The current ownership transfer process involves the current owner calling Unlock.transferOwnership(). This function checks the new owner is not the zero address and proceeds to write the new owner's address into the owner's state variable. If the nominated EOA account is not a valid account, it is entirely possible the owner may accidentally transfer ownership to an uncontrolled account, breaking all functions with the onlyOwner() modifier. Lack of two-step procedure for critical operations leaves them error-prone if the address is incorrect, the new address will take on the functionality of the new role immediately

for Ex : -Alice deploys a new version of the whitehack group address. When she invokes the whitehack group address setter to replace the address, she accidentally enters the wrong address. The new address now has access to the role immediately and is too late to revert

Proof of Concept

1. Navigate to the following contract.

https://github.com/code-423n4/2022-06-yieldy/blob/main/src/contracts/LiquidityReserve.sol#L16

Tools Used

Code Review

Recommended Mitigation Steps

Lack of two-step procedure for critical operations leaves them error-prone. Consider adding two step procedure on the critical functions.

C4-003 : # Pragma Version

Impact

In the contracts, floating pragmas should not be used. Contracts should be deployed with the same compiler version and flags that they have been tested with thoroughly. Locking the pragma helps to ensure that contracts do not accidentally get deployed using, for example, an outdated compiler version that might introduce bugs that affect the contract system negatively.

## Proof of Concept

https://swcregistry.io/docs/SWC-103

All Contracts

Tools Used

Manual code review

Recommended Mitigation Steps

Lock the pragma version: delete pragma solidity 0.8.15 in favor of pragma solidity 0.8.15.

C4-004 : # Missing zero-address check in the setter functions and initiliazers

Impact

Missing checks for zero-addresses may lead to infunctional protocol, if the variable addresses are updated incorrectly.

Proof of Concept

1. Navigate to the following contracts.

https://github.com/code-423n4/2022-06-yieldy/blob/main/src/contracts/Staking.sol#L177

Tools Used

Code Review

Recommended Mitigation Steps

Consider adding zero-address checks in the discussed constructors: require(newAddr != address(0));.

C4-005 : Low level calls with solidity version 0.8.14 can result in optimiser bug.

Impact

The protocol is using low level calls with solidity version 0.8.9 which can result in optimizer bug.

https://medium.com/certora/overly-optimistic-optimizer-certora-bug-disclosure-2101e3f7994d

Proof of Concept

https://github.com/code-423n4/2022-06-yieldy/blob/main/src/contracts/LiquidityReserve.sol#L2

Tools Used

Code Review

Recommended Mitigation Steps

Consider upgrading to solidity 0.8.15.

C4-006 : The Contract Should safeApprove(0) first - LOW

Impact

Some tokens (like USDT L199) do not work when changing the allowance from an existing non-zero allowance value. They must first be approved by zero and then the actual allowance must be approved.

IERC20(token).safeApprove(address(operator), 0);
IERC20(token).safeApprove(address(operator), amount);

When trying to re-approve an already approved token, all transactions revert and the protocol cannot be used.

Proof of Concept

(https://github.com/code-423n4/2022-06-yieldy/blob/main/src/contracts/LiquidityReserve.sol#L81)

Tools Used

None

Recommended Mitigation Steps

Approve with a zero amount first before setting the actual amount.

C4-007 : Use of Block.timestamp

Impact - Non-Critical

Block timestamps have historically been used for a variety of applications, such as entropy for random numbers (see the Entropy Illusion for further details), locking funds for periods of time, and various state-changing conditional statements that are time-dependent. Miners have the ability to adjust timestamps slightly, which can prove to be dangerous if block timestamps are used incorrectly in smart contracts.

Proof of Concept

1. Navigate to the following contract.

https://github.com/code-423n4/2022-06-yieldy/blob/main/src/contracts/Staking.sol#L361

Tools Used

Manual Code Review

Recommended Mitigation Steps

Block timestamps should not be used for entropy or generating random numbers—i.e., they should not be the deciding factor (either directly or through some derivation) for winning a game or changing an important state.

Time-sensitive logic is sometimes required; e.g., for unlocking contracts (time-locking), completing an ICO after a few weeks, or enforcing expiry dates. It is sometimes recommended to use block.number and an average block time to estimate times; with a 10 second block time, 1 week equates to approximately, 60480 blocks. Thus, specifying a block number at which to change a contract state can be more secure, as miners are unable to easily manipulate the block number.

C4-008 : Incompatibility With Rebasing/Deflationary/Inflationary tokens

Impact - LOW

PrePo protocol do not appear to support rebasing/deflationary/inflationary tokens whose balance changes during transfers or over time. The necessary checks include at least verifying the amount of tokens transferred to contracts before and after the actual transfer to infer any fees/interest.

Example Test

During the lending, If the inflationary/deflationary tokens are used excepted amount will be lower than deposit.

Proof of Concept

1. Navigate to the following contract.

https://github.com/code-423n4/2022-06-yieldy/blob/main/src/contracts/LiquidityReserve.sol#L75

Tools Used

Manual Code Review

Recommended Mitigation Steps

• Ensure that to check previous balance/after balance equals to amount for any rebasing/inflation/deflation
• Add support in contracts for such tokens before accepting user-supplied tokens
• Consider supporting deflationary / rebasing / etc tokens by extra checking the balances before/after or strictly inform your users not to use such tokens if they don't want to lose them.

C4-009 : Add disableInitializers to Prevent Front-running

Impact

Defining initial values for variables when declaring them in a contract like in the code below does not work for upgradeable contracts.

https://github.com/code-423n4/2022-06-yieldy/blob/main/src/contracts/LiquidityReserve.sol#L36

Refer to explanation below:

https://docs.openzeppelin.com/upgrades-plugins/1.x/writing-upgradeable#avoid-initial-values-in-field-declarations

Also, one should not leave the implementation contract uninitialized. None of the implementation contracts in the code base contains the code recommended by OpenZeppelin below, or an empty constructor with the initializer modifier.

Tools Used

Code Review

Recommended Mitigation Steps

/// @custom:oz-upgrades-unsafe-allow constructor
constructor() {
  _disableInitializers();
}

Refer to the link below:

https://docs.openzeppelin.com/upgrades-plugins/1.x/writing-upgradeable#initializing_the_implementation_contract

C4-010 : ERC20 approve method missing return value check - LOW

Impact

The following contract functions performs an ERC20.approve() call but does not check the success return value. Some tokens do not revert if the approval failed but return false instead.

Proof of Concept

1. Navigate to the following contracts.

https://github.com/code-423n4/2022-06-yieldy/blob/main/src/contracts/LiquidityReserve.sol#L81

2. Tokens that don't actually perform the approve and return false are still counted as a correct approve.

Tools Used

None

Recommended Mitigation Steps

Its recommend to using OpenZeppelin’s SafeERC20 versions with the safeApprove function that handles the return value check as well as non-standard-compliant tokens.

Reference : https://github.com/OpenZeppelin/openzeppelin-contracts/blob/release-v4.1/contracts/token/ERC20/utils/SafeERC20.sol#L74

C4-011 : Token Existing Check Is not Implemented - LOW

Impact

setToAndFromCurve sets to and from coin indexes for curve exchange however token existing check is not implemented on the function.

Proof of Concept

1. Navigate to the following contract.

https://github.com/code-423n4/2022-06-yieldy/blob/main/src/contracts/Staking.sol#L80

Tools Used

None

Recommended Mitigation Steps

Ensure that all tokens are validated from curve pool.

[S]: Suggested optimation, save a decent amount of gas without compromising readability;

[M]: Minor optimation, the amount of gas saved is minor, change when you see fit;

[N]: Non-preferred, the amount of gas saved is at cost of readability, only apply when gas saving is a top priority.

ISSUE LIST

C4-001: Revert String Size Optimization [S]

C4-002 : Adding unchecked directive can save gas [S]

C4-003 : Check if amount > 0 before token transfer can save gas [S]

C4-004 : Using operator && used more gas [S]

C4-005 : Non-strict inequalities are cheaper than strict ones [M]

C4-006 : Use Custom Errors instead of Revert Strings to save Gas [S]

C4-007 : Use Shift Right/Left instead of Division/Multiplication if possible [N]

C4-008 : State Variables that can be changed to immutable [S]

C4-009 : Use calldata instead of memory for function parameters [M]

C4-010 : > 0 can be replaced with != 0 for gas optimization [S]

C4-011 : Free gas savings for using solidity 0.8.10+ - [S]

C4-001: Revert String Size Optimization

Impact

Shortening revert strings to fit in 32 bytes will decrease deploy time gas and will decrease runtime gas when the revert condition has been met.

Revert strings that are longer than 32 bytes require at least one additional mstore, along with additional overhead for computing memory offset, etc.

Proof of Concept

Revert strings > 32 bytes are here:

https://github.com/code-423n4/2022-06-yieldy/blob/main/src/contracts/Staking.sol#L586

Tools Used

Manual Review

Recommended Mitigation Steps

Shorten the revert strings to fit in 32 bytes. That will affect gas optimization.

C4-002 : Adding unchecked directive can save gas

Impact

For the arithmetic operations that will never over/underflow, using the unchecked directive (Solidity v0.8 has default overflow/underflow checks) can save some gas from the unnecessary internal over/underflow checks.

Proof of Concept

https://github.com/code-423n4/2022-06-yieldy/blob/main/src/contracts/Staking.sol#L707

Tools Used

None

Recommended Mitigation Steps

Consider applying unchecked arithmetic where overflow/underflow is not possible. Example can be seen from below.

Unchecked{i++};

C4-003 : Check if amount > 0 before token transfer can save gas

Impact

Since _amount can be 0. Checking if (_amount != 0) before the transfer can potentially save an external call and the unnecessary gas cost of a 0 token transfer.

Proof of Concept

https://github.com/code-423n4/2022-06-yieldy/blob/main/src/contracts/LiquidityReserve.sol#L75
https://github.com/code-423n4/2022-06-yieldy/blob/main/src/contracts/Staking.sol#L747

All Contracts

Tools Used

None

Recommended Mitigation Steps

Consider checking amount != 0.

C4-005 : Using operator && used more gas

Impact

Using double require instead of operator && can save more gas.

Proof of Concept

1. Navigate to the following contracts.

https://github.com/code-423n4/2022-06-yieldy/blob/main/src/contracts/LiquidityReserve.sol#L45

Tools Used

Code Review

Recommended Mitigation Steps

Example

using &&:

function check(uint x)public view{
require(x == 0 && x < 1 );
}
// gas cost 21630

using double require:

require(x == 0 );
require( x < 1);
}
}
// gas cost 21622

C4-006 : Non-strict inequalities are cheaper than strict ones

Impact

Strict inequalities add a check of non equality which costs around 3 gas.

Proof of Concept

https://github.com/code-423n4/2022-06-yieldy/blob/main/src/contracts/Staking.sol#L326

Tools Used

Code Review

Recommended Mitigation Steps

Use >= or <= instead of > and < when possible.

C4-007 : Use Custom Errors instead of Revert Strings to save Gas

Custom errors from Solidity 0.8.4 are cheaper than revert strings (cheaper deployment cost and runtime cost when the revert condition is met)

Source Custom Errors in Solidity:

Starting from Solidity v0.8.4, there is a convenient and gas-efficient way to explain to users why an operation failed through the use of custom errors. Until now, you could already use strings to give more information about failures (e.g., revert("Insufficient funds.");), but they are rather expensive, especially when it comes to deploy cost, and it is difficult to use dynamic information in them.

Custom errors are defined using the error statement, which can be used inside and outside of contracts (including interfaces and libraries).

Instances include:

Require Statements

Tools Used

Code Review

Recommended Mitigation Steps

Recommended to replace revert strings with custom errors.

C4-008 : Use Shift Right/Left instead of Division/Multiplication if possible

Impact

A division/multiplication by any number x being a power of 2 can be calculated by shifting log2(x) to the right/left.

While the DIV opcode uses 5 gas, the SHR opcode only uses 3 gas. Furthermore, Solidity's division operation also includes a division-by-0 prevention which is bypassed using shifting.

Proof of Concept

Contracts

Tools Used

None

Recommended Mitigation Steps

A division/multiplication by any number x being a power of 2 can be calculated by shifting log2(x) to the right/left.

C4-009 : State Variables that can be changed to immutable

Impact

Solidity 0.6.5 introduced immutable as a major feature. It allows setting contract-level variables at construction time which gets stored in code rather than storage.

Consider the following generic example:

contract C {
 /// The owner is set during contruction time, and never changed afterwards.
 address public owner = msg.sender;
}

In the above example, each call to the function owner() reads from storage, using a sload. After EIP-2929, this costs 2100 gas cold or 100 gas warm. However, the following snippet is more gas efficient:

contract C {
 /// The owner is set during contruction time, and never changed afterwards.
 address public immutable owner = msg.sender;
}

In the above example, each storage read of the owner state variable is replaced by the instruction push32 value, where value is set during contract construction time. Unlike the last example, this costs only 3 gas.

Code Location

https://github.com/code-423n4/2022-06-yieldy/blob/main/src/contracts/LiquidityReserve.sol#L48

Tools Used

None

Recommended Mitigation Steps

Consider using immutable variable.

C4-010 : Use calldata instead of memory for function parameters

Impact

In some cases, having function arguments in calldata instead of memory is more optimal.

Consider the following generic example:

contract C {
 function add(uint[] memory arr) external returns (uint sum) {
     uint length = arr.length;
     for (uint i = 0; i < arr.length; i++) {
         sum += arr[i];
     }
 }
}

In the above example, the dynamic array arr has the storage location memory. When the function gets called externally, the array values are kept in calldata and copied to memory during ABI decoding (using the opcode calldataload and mstore). And during the for loop, arr[i] accesses the value in memory using a mload. However, for the above example this is inefficient. Consider the following snippet instead:

contract C {
 function add(uint[] calldata arr) external returns (uint sum) {
     uint length = arr.length;
     for (uint i = 0; i < arr.length; i++) {
         sum += arr[i];
     }
 }
}

In the above snippet, instead of going via memory, the value is directly read from calldata using calldataload. That is, there are no intermediate memory operations that carries this value.

Gas savings: In the former example, the ABI decoding begins with copying value from calldata to memory in a for loop. Each iteration would cost at least 60 gas. In the latter example, this can be completely avoided. This will also reduce the number of instructions and therefore reduces the deploy time cost of the contract.

In short, use calldata instead of memory if the function argument is only read.

Note that in older Solidity versions, changing some function arguments from memory to calldata may cause "unimplemented feature error". This can be avoided by using a newer (0.8.*) Solidity compiler.

Proof of Concept

1. Navigate to the following smart contract line.

https://github.com/code-423n4/2022-06-yieldy/blob/main/src/contracts/Staking.sol#L264

Tools Used

None

Recommended Mitigation Steps

Some parameters in examples given above are later hashed. It may be beneficial for those parameters to be in memory rather than calldata.

C4-011 : > 0 can be replaced with != 0 for gas optimization

Impact

!= 0 is a cheaper operation compared to > 0, when dealing with uint.

Proof of Concept

1. Navigate to the following contract sections.

https://github.com/code-423n4/2022-06-yieldy/blob/main/src/contracts/LiquidityReserve.sol#L223

https://github.com/code-423n4/2022-06-yieldy/blob/main/src/contracts/Yieldy.sol#L96

https://github.com/code-423n4/2022-06-yieldy/blob/main/src/contracts/Yieldy.sol#L83

Tools Used

None

Recommended Mitigation Steps

Consider to replace > 0 with != 0 for gas optimization.

C4-012 : Free gas savings for using solidity 0.8.10+

Impact

Using newer compiler versions and the optimizer gives gas optimizations and additional safety checks are available for free.

Proof of Concept

All Contracts

Solidity 0.8.10 has a useful change which reduced gas costs of external calls which expect a return value: https://blog.soliditylang.org/2021/11/09/solidity-0.8.10-release-announcement/

Solidity 0.8.13 has some improvements too but not well tested.

Code Generator: Skip existence check for external contract if return data is expected. In this case, the ABI decoder will revert if the contract does not exist

All Contracts

Tools Used

None

Recommended Mitigation Steps

Consider to upgrade pragma to at least 0.8.10.