Lybra Finance - n1punp's results

Lines of code

https://github.com/code-423n4/2023-06-lybra/blob/main/contracts/lybra/token/EUSD.sol#L415-L418

Vulnerability details

Impact

EUSD's exchange rate (from shares to amounts) should never decrease, as each share should keep accruing value. However, it's possible that the exchange rate can go down via malicious mint function as follows:

1. When the exchange rate is 1.1 (ex: 1 share = 1.1 eusd).
2. An attacker can try to mint 1 eusd --> the equivalent amount of share to be minted will be 1/1.1 = ~0.9. However, getSharesByMintedEUSD will round the share down to 0.
3. This means the following code in the mint function will trigger:

        uint256 sharesAmount = getSharesByMintedEUSD(_mintAmount);
        if (sharesAmount == 0) {
            //EUSD totalSupply is 0: assume that shares correspond to EUSD 1-to-1
            sharesAmount = _mintAmount;
        }

This means the sharesAmount will be overwritten with _mintAmount, which is 1 instead --> allowing an attacker to mint eusd at the exchange rate of 1 instead of 0.9 --> diluting the shares

Proof of Concept

Described above.

Tools Used

Manual Review

Recommended Mitigation Steps

• Instead of checking sharesAmount == 0 , check for totalSupply == 0 for initial rate.
• Also consider disallowing minting of 0 shares.

Assessed type

Math