No Transfer Ownership Pattern

[code423n4]

Handle

leastwood

Vulnerability details

Impact

The current ownership transfer process involves the current owner calling NoteERC20.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.

Proof of Concept

https://github.com/code-423n4/2021-08-notional/blob/main/contracts/external/governance/NoteERC20.sol#L123-L127

Tools Used

Manual code review

Recommended Mitigation Steps

Consider implementing a two step process where the owner nominates an account and the nominated account needs to call an acceptOwnership() function for the transfer of ownership to fully succeed. This ensures the nominated EOA account is a valid and active account.