The audit makes no statements or warranties about utility of the code, safety of the code, suitability of the business model, investment advice, endorsement of the platform or its products, regulatory regime for the business model, or any other statements about fitness of the contracts to purpose, or their bug free status. The audit documentation is for discussion purposes only. The information presented in this report is confidential and privileged. If you are reading this report, you agree to keep it confidential, not to copy, disclose or disseminate without the agreement of the Client. If you are not the intended recipient(s) of this document, please note that any disclosure, copying or dissemination of its content is strictly forbidden.
A group of auditors are involved in the work on the audit. The security engineers check the provided source code independently of each other in accordance with the methodology described below:
- Project documentation review.
- General code review.
- Reverse research and study of the project architecture on the source code alone.
- Build an independent view of the project's architecture.
- Identifying logical flaws.
- Manual code check for vulnerabilities listed on the Contractor's internal checklist. The Contractor's checklist is constantly updated based on the analysis of hacks, research, and audit of the clients' codes.
- Code check with the use of static analyzers (i.e Slither, Mythril, etc).
Eliminate typical vulnerabilities (e.g. reentrancy, gas limit, flash loan attacks etc.).
- Detailed study of the project documentation.
- Examination of contracts tests.
- Examination of comments in code.
- Comparison of the desired model obtained during the study with the reversed view obtained during the blind audit.
- Exploits PoC development with the use of such programs as Brownie and Hardhat.
Detect inconsistencies with the desired model.
- Cross check: each auditor reviews the reports of the others.
- Discussion of the issues found by the auditors.
- Issuance of an interim audit report.
- Double-check all the found issues to make sure they are relevant and the determined threat level is correct.
- Provide the Client with an interim report.
- The Client either fixes the issues or provides comments on the issues found by the auditors. Feedback from the Customer must be received on every issue/bug so that the Contractor can assign them a status (either "fixed" or "acknowledged").
- Upon completion of the bug fixing, the auditors double-check each fix and assign it a specific status, providing a proof link to the fix.
- A re-audited report is issued.
- Verify the fixed code version with all the recommendations and its statuses.
- Provide the Client with a re-audited report.
- The Customer deploys the re-audited source code on the mainnet.
- The Contractor verifies the deployed code with the re-audited version and checks them for compliance.
- If the versions of the code match, the Contractor issues a public audit report.
- Conduct the final check of the code deployed on the mainnet.
- Provide the Customer with a public audit report.
All vulnerabilities discovered during the audit are classified based on their potential severity and have the following classification:
| Severity | Description |
|---|---|
| Critical | Bugs leading to assets theft, fund access locking, or any other loss of funds. |
| High | Bugs that can trigger a contract failure. Further recovery is possible only by manual modification of the contract state or replacement. |
| Medium | Bugs that can break the intended contract logic or expose it to DoS attacks, but do not cause direct loss funds. |
| Low | Bugs that do not have a significant immediate impact and could be easily fixed. |
Based on the feedback received from the Customer regarding the list of findings discovered by the Contractor, they are assigned the following statuses:
| Status | Description |
|---|---|
| Fixed | Recommended fixes have been made to the project code and no longer affect its security. |
| Acknowledged | The Customer is aware of the finding. Recommendations for the finding are planned to be resolved in the future. |
Resolv is a protocol that manages USR, a stablecoin pegged to the US Dollar and natively backed by Ether (ETH). The protocol's key features include issuing and redeeming USR in exchange for other tokens, ensuring continuous backing by ETH through hedging with short perpetual futures positions, and maintaining the Resolv Liquidity Pool (RLP), a liquid insurance pool designed to keep USR overcollateralized. Users can mint and redeem both USR and RLP by depositing collateral on a 1:1 basis.
USR is created by depositing liquid assets like USDC, USDT, or ETH on a 1:1 value basis. Users can stake USR into stUSR to earn yield. stUSR is a rebasable yield-generating wrapper on USR.
| Title | Description |
|---|---|
| Client | Resolv |
| Project name | Resolv |
| Timeline | May 14 2024 - June 07 2024 |
| Number of Auditors | 3 |
| Date | Commit Hash | Note |
|---|---|---|
| 14.05.2024 | a36e73c4be0b5f233de6bfc8d2c276136bf67573 | Commit for the audit |
| 24.05.2024 | a1575cdc00cf04cc1f4344f5db268670c093dc2b | Commit for the re-audit |
| 10.06.2024 | 294168806fe2d24add6b6dd4f0c431e00009c65c | Commit from the public repo |
The audit covered the following files:
| File name | Contract deployed on mainnet | Comment |
|---|---|---|
| TransparentUpgradeableProxy.sol | 0x66a1e37c9b0eaddca17d3662d6c05f4decf3e110 | Proxy for USR; OpenZeppelin 5.0.1 |
| TransparentUpgradeableProxy.sol | 0x4956b52aE2fF65D74CA2d61207523288e4528f96 | Proxy for RLP; OpenZeppelin 5.0.1 |
| TransparentUpgradeableProxy.sol | 0x6c8984bc7DBBeDAf4F6b2FD766f16eBB7d10AAb4 | Proxy for stUSR; OpenZeppelin 5.0.1 |
| SimpleToken.sol | 0xef4c4bcbe105170810b6ef58a286d9ce97a1fabe | Implmentation for USR and RLP |
| StUSR.sol | 0xba1600735a039e2b3bf1d1d2f1a7f80f45973da7 | |
| AddressesWhitelist.sol | 0x5943026E21E3936538620ba27e01525bBA311255 | |
| ExternalRequestsManagerBetaV1.sol | 0x3Ed5Dc199d8BcE1e1a9eD8520A215Ae9AF9BD45D | |
| ExternalRequestsManagerBetaV1.sol | 0x052B1cAcbDeA7b4d711C6f428A20618eF60FDA1B | |
| RewardDistributor.sol | 0xbE23BB6D817C08E7EC4Cd0adB0E23156189c1bA9 |
| Severity | # of Findings |
|---|---|
| CRITICAL | 1 |
| HIGH | 0 |
| MEDIUM | 4 |
| LOW | 0 |
The project comprises two main components: smart contracts and an off-chain part. Both components are crucial for the project's overall functionality. This audit specifically focused on the smart contracts, while the off-chain part was outside the scope.
We audited the contracts related to RLP and USR token operations. Our audit included the management and minting of tokens, as well as the distribution of rewards and staking.
Key activities included:
- Checking the transaction flow for minting and burning, managing storage for requests, their statuses, and finalization
- Testing scenarios of setting different smart-contract interconnection, resetting roles
- Ensuring role management flow is secure and doesn't allow risky setups
- Verifying calculations for rebasable math, testing approval management, calculation of amounts used for transfers and approvals adjusted to rebasable specifics
- Ensuring conversions between shares and balances are correct, testing scenarios for potential wrong roundings
- Checking usage of permits including permit implementations for project tokens
- Testing the impact of tokens with the unusual design
Key Observations and Recommendations:
- Centralization: The entire architecture is centralized. Minting, burning, and collateral management are executed by controlled accounts, which requires strong trust in the project maintainers. In addition, admins can withdraw all funds from smart contracts. The system doesn't use oracles.
The audited code was published in the public repository: https://github.com/resolv-im/resolv-contracts-public/commit/294168806fe2d24add6b6dd4f0c431e00009c65c
Fixed in https://github.com/resolv-im/resolv-contracts/commit/a1575cdc00cf04cc1f4344f5db268670c093dc2b
The empty StUSR pool is vulnerable to an Inflation Attack despite having some protective measures, which can lead to the loss of funds for early depositors to the benefit of a hacker, as well as causing a DOS (Denial of Service).
StUSR has two protection mechanisms against an Inflation Attack:
- A depositor cannot receive 0 shares.
- The exchange rate is calculated with 1 virtual share and 1 virtual asset.
In practice, 1 virtual share is not sufficient to protect against a profitable attack.
Example of an attack:
- Before an attack, the pool has 0 shares and 0 assets.
- The hacker mints 1000 wei shares. Now the pool has 1000 wei shares plus 1 virtual share.
- The hacker directly transfers
1,001,000 USR - 1001 weiinto the StUSR pool. At this point, the hacker holds 1000 shares worth 1000 USR each, while losing 1000 USR to the pool's 1 virtual share. - The first victim deposits 1999 USR and receives
shares = 1999e18 * 1001 / 1001000e18 = 1 wei. The value of 1 share is now approximately 1001 USR. The victim loses about 1000 USR, which is distributed to the pool. Since the hacker owns 99.8% of the pool, most of the profit goes to the hacker. At this point, the hacker has almost recovered the cost of the attack. - The second victim deposits 1999 USR and receives
shares = 1999e18 * (1001 + 1) / (1002999e18 + 1) = 1 wei. The value of 1 share is now approximately 1002 USR. Again, the victim loses about 1000 USR, mostly to the hacker's benefit. At this point, the hacker is in profit.
State of the contract for each step:
| Step | totalShares()+1 |
_totalUnderlyingTokens()+1 |
1 wei share value | Hacker's total profit (approx.) |
|---|---|---|---|---|
| 1 | 0 | 0 | ||
| 2 | 1000 + 1 | 1000 + 1 | 1 wei | 0 |
| 3 | 1000 + 1 | 1,001,000e18 | 1000 USR | -1000 USD |
| 4 | 1001 + 1 | 1,002,999e18 | ~1001 USR | 0 |
| 5 | 1002 + 1 | 1,004,998e18 | ~1002 USR | +1000 USD |
We recommend using 1000 virtual shares.
Fixed with https://github.com/resolv-im/resolv-contracts/commit/f8cb32221d0e660f890b48012c4dcc8e3d423dbb
Not found
Fixed in https://github.com/resolv-im/resolv-contracts/commit/a1575cdc00cf04cc1f4344f5db268670c093dc2b
- https://github.com/resolv-im/resolv-contracts/blob/a36e73c4be0b5f233de6bfc8d2c276136bf67573/contracts/beta/ExternalRequestsManagerBetaV1.sol#L234
- https://github.com/resolv-im/resolv-contracts/blob/a36e73c4be0b5f233de6bfc8d2c276136bf67573/contracts/beta/ExternalRequestsManagerBetaV1.sol#L175
The amounts of tokens to mint and transfer in completeMint() and completeBurn() in the ExternalRequestsManagerBetaV1 are not related to any on-chain oracle and are prone to slippage: users may receive less tokens than they expected.
We recommend adding the minAmountOut and deadline parameters to the workflow.
- The
minMintAmountparameter was added https://github.com/resolv-im/resolv-contracts/commit/9c3999fe97ea69b938962772cafc065dcc6b0021- The
deadlineparameter has not been added since users can cancel any unhandled requests at any time. Adding a deadline does not make practical sense and would only complicate the logic unnecessarily.
Fixed in https://github.com/resolv-im/resolv-contracts/commit/a1575cdc00cf04cc1f4344f5db268670c093dc2b
- https://github.com/resolv-im/resolv-contracts/blob/a36e73c4be0b5f233de6bfc8d2c276136bf67573/contracts/beta/ExternalRequestsManagerBetaV1.sol#L209
- https://github.com/resolv-im/resolv-contracts/blob/a36e73c4be0b5f233de6bfc8d2c276136bf67573/contracts/beta/ExternalRequestsManagerBetaV1.sol#L148
The onlyAllowedProviders check is applied in cancel operations. If a provider gets delisted after creating a pending request, they won't be able to cancel it.
This situation may arise when the whitelist was inactive and then got activated via setWhitelistEnabled().
We recommend removing the onlyAllowedProviders check from cancelMint() and cancelBurn().
Fixed with https://github.com/resolv-im/resolv-contracts/commit/db9ca2a69f8db25c5d7bcf312db5a730515069bc
Fixed in https://github.com/resolv-im/resolv-contracts/commit/a1575cdc00cf04cc1f4344f5db268670c093dc2b
StUSR, when transferring, converts the underlying amount into shares with a rounding error in favor of the sender (i.e., downwards). This error can be significant if the exchange rate between shares and the underlying asset is inflated. Specifically, for some positive underlying amounts, the number of shares will be zero. In such cases, the transfer() function will be executed successfully, but the balances of the recipient and the sender will remain unchanged. A hacker could exploit this issue to attack third-party protocols, for example, if a lending protocol integrates StUSD as collateral.
A similar problem affects transferFrom(): the transferred allowance will be fully consumed even if the recipient receives zero shares (and consequently, zero underlying assets).
We recommend documenting this nuance, mentioning that during transfers using either transfer() or transferFrom(), the user may receive fewer funds than specified in the arguments, and the allowance will still be consumed. A more radical solution would be to abandon the rebasing token in favor of a regular ERC-4626 vault from OpenZeppelin's standard implementation.
Documented with natspec https://github.com/resolv-im/resolv-contracts/commit/a1575cdc00cf04cc1f4344f5db268670c093dc2b
Acknowledged
Rewards in StUSR are vulnerable to yield stealing.
A hacker can sandwich the RewardDistributor.distribute() transactions from the public mempool:
- In the first transaction, a hacker front-runs by staking a significant amount of USR in StUSR to become the primary stakeholder.
- The transaction then occurs, distributing rewards in StUSR.
- In the next transaction, the hacker back-runs by withdrawing their funds with a guaranteed profit.
This results in regular users losing the incentive to stake funds, as the hacker can capture all distributed rewards.
We recommend using private mempools for reward distribution transactions.
- Private mempools are utilized.
- Given that the emission of new USR is available only to known and whitelisted users, and redemption is subject to an up to 24hr timelock, there is minimal opportunity for a malicious actor to access a "significant amount of USR" relative to the StUSR supply and significantly dilute the stakes of legitimate users.
Not found
MixBytes is a team of blockchain developers, auditors and analysts keen on decentralized systems. We build opensource solutions, smart contracts and blockchain protocols, perform security audits, work on benchmarking and software testing solutions, do research and tech consultancy.