prePO contest

prePO contest details

• $28,500 USDC main award pot
• $1,500 USDC gas optimization award pot
• Join C4 Discord to register
• Submit findings using the C4 form
• Read our guidelines for more details
• Starts March 17, 2022 00:00 UTC
• Ends March 19, 2022 23:59 UTC

Protocol Overview

prePO is a decentralized trading platform allowing anyone to speculate on the valuation of any pre-IPO company or pre-token crypto project.

prePO markets function similarly to scalar prediction markets, with traders speculating (by going long or short) on the fully-diluted market capitalization that a pre-IPO company or pre-token crypto project will have when it eventually goes public.

Recommended reading:

• Blog: Introducing prePO
• Blog: How does prePO Work?
• prePO Documentation
• prePO Developer Docs (contains architecture diagrams, sequence diagrams, and contract documentation)
• Blog: Augur market economics (particularly the ‘Scalar markets’ section)

Recommended viewing:

• prePO Documentation and Contract Video Walkthrough

Smart Contracts

All the contracts in this section are to be reviewed. Any contracts not in this list are to be ignored for this contest.

Collateral Layer

AccountAccessController.sol + IAccountAccessController.sol (87 + 18 sloc)

• External contracts called: None
• Libraries used: None

CollateralDepositRecord.sol + ICollateralDepositRecord.sol (104 + 16 sloc)

• External contracts called: None
• Libraries used: None

DepositHook.sol + IHook.sol (53 + 10 sloc)

• External contracts called: AccountAccessController.sol, CollateralDepositRecord.sol
• Libraries used: None

WithdrawHook.sol + IHook.sol (53 + 10 sloc)

• External contracts called: CollateralDepositRecord.sol
• Libraries used: None

SingleStrategyController.sol + IStrategyController.sol + IStrategy.sol (79 + 19 + 10 sloc)

• External contracts called: ERC20 serving as BaseToken (e.g. USDC), strategy contract that implements IStrategy.sol
• Libraries used: None

Collateral.sol + ICollateral.sol (276 + 59 sloc)

• External contracts called: ERC20 serving as BaseToken (e.g. USDC), SingleStrategyController.sol, DepositHook.sol, WithdrawHook.sol
• Libraries used: None

Outcome Layer

LongShortToken.sol + ILongShortToken.sol (12 + 7 sloc)

• External contracts called: None
• Libraries used: None

PrePOMarket.sol + IPrePOMarket.sol (223 + 46 sloc)

• External contracts called: Collateral.sol, 2x LongShortToken.sol
• Libraries used: None

PrePOMarketFactory.sol + IPrePOMarketFactory.sol (107 + 28 sloc)

• External contracts called: None
• Libraries used: None

Setup

yarn hardhat node will launch a JSON-RPC node locally on localhost:8545.

Running yarn hardhat node without the --no-deploy tag will also execute everything defined in the deploy folder.

It is advised to instead run deployments separately using yarn hardhat deploy with specific --tags to ensure you only deploy what you need, e.g. yarn hardhat deploy --network 'localhost' --tags 'Collateral'

Because our scripts use hardhat-upgrades to deploy our upgradeable contracts, they are not managed by hardhat-deploy.
Upgradeable deployment addresses are kept track of separately in a local .env file.

hardhat-deploy will automatically call deployment scripts for any dependencies of a specified tag.
Per the tag dependency tree below, specifying PrePOMarketFactory under --tags, will deploy the entire PrePO core stack.
A mock strategy can be deployed as well for testing purposes with the MockStrategy tag.

 CollateralDepositRecord   AccountAccessController
     ^              ^                  ^
     |              |                  |
     |              |                  |
WithdrawHook   DepositHook-------------+              SingleStrategyController   BaseToken
     ^              ^                                             ^                  ^
     |              |                                             |                  |
     |              |                                             |                  |
     +--------------+-----------------------Collateral------------+------------------+
                                                ^
                                                |
                                                |
                                      +---------+---------+
                                      |                   |
                                      |                   |
                                      |                   |
                             PrePOMarketFactory     MockStrategy
                                                     (optional)

Protections

The Collateral vault, consisting of AccountAccessController.sol, Collateral.sol, CollateralDepositRecord.sol , DepositHook.sol , and WithdrawHook.sol, has the following features to protect itself from malicious actors:

• Withdrawals must be requested in a prior block via initiateWithdrawal(uint256 amount) . The number of blocks until a request expires is settable by the vault owner() . This is mainly for mitigating the feasibility of a flash loan attack.
• Global and per-user deposit caps. The net BaseToken amount deposited by each account is kept track of by CollateralDepositRecord.sol.
• An allow/blocklist to only allow certain accounts to deposit into the Collateral vault. Allowed and Blocked accounts are managed by AccountAccessController.sol .
• The owner of the Collateral vault can disable deposit and withdraw in the case of an emergency.
• All onlyOwner functions will be executed by a timelocked executor smart contract (out of audit scope), which itself will only be callable by the DAO multisig.

Areas of Concern

The following are potential areas of concern which could benefit from focus during the audit:

• Vulnerabilities in Collateral.sol and SingleStrategyController.sol that could result in a malicious actor being able to mint/redeem an outsized amount of shares/BaseToken. The actual Strategy to be used in production is not under the scope of this review and is still in development, so you will have to analyze the security of our vault-strategy architecture without a particular underlying Strategy. For our testnet, we are using a mock Strategy (MockStrategy.sol).
• Ways an unauthorized address could manipulate AccountAccessController.sol or DepositHook.sol into allowing it to deposit assets into Collateral.sol.
• Each deployment of PrePOMarket.sol will be initialized with its own parameters, dictating the terms for minting/redeeming positions within the market. We want to ensure these parameters cannot be bypassed (i.e. A trader minting positions after expiry or redeeming their position for an outsized amount of Collateral).
• Our contracts utilize OpenZeppelin's Ownable.sol to prevent anyone besides owner() from modifying sensitive parameters. We want to be sure this restriction cannot be bypassed and want to be alerted to any sensitive parameters in our contracts that are unprotected.

Known Issues

We are aware the following state variables in PrePOMarket.sol:

_mintingFee, _redemptionFee, _expiryTime, _floorValuation, _ceilingValuation, _floorLongPrice, _ceilingLongPrice, _finalLongPrice, _publicMinting

and constants:

MAX_PRICE, FEE_DENOMINATOR, FEE_LIMIT

could use smaller types to save on deployment/initialization costs via struct packing. We will not be awarding optimizations found related to condensing types for these variables.

Upgradability

Collateral.sol and PrePOMarketFactory.sol are the only upgradeable contracts. If we ever need to update PrePOMarket.sol to add new features for future markets, we can upgrade PrePOMarketFactory.sol with the new PrePOMarket.sol implementation. In production, our upgradeable contracts will be deployed using OpenZeppelin’s Hardhat Upgrades API.

Gas Optimization Notes

Any gas optimization suggestions should focus on reducing costs for functions that will be called many times. If an optimization increases the deployment cost for a contract, the savings provided by that optimization over a reasonable timeframe should outweigh the increased deployment cost.

Functions that would likely be called often are listed below:

AccountAccessController.sol

isAccountAllowed, isAccountBlocked, allowAccounts, blockAccounts

Collateral.sol

deposit, initiateWithdrawal, _processDelayedWithdrawal, withdraw

CollateralDepositRecord.sol

recordDeposit, recordWithdrawal

PrePOMarket.sol

mintLongShortTokens, redeem

PrePOMarketFactory.sol

createMarket

SingleStrategyController.sol

deposit, withdraw