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Security Audit
January 17, 2024
Version 1.0.0
Presented by 0xMacro
This document includes the results of the security audit for Kwenta's smart contract code as found in the section titled ‘Source Code’. The security audit was performed by the Macro security team from Jan 10, 2023 to Jan 12, 2024.
The purpose of this audit is to review the source code of certain Kwenta Solidity contracts, and provide feedback on the design, architecture, and quality of the source code with an emphasis on validating the correctness and security of the software in its entirety.
Disclaimer: While Macro’s review is comprehensive and has surfaced some changes that should be made to the source code, this audit should not solely be relied upon for security, as no single audit is guaranteed to catch all possible bugs.
The following is an aggregation of issues found by the Macro Audit team:
| Severity | Count | Acknowledged | Won't Do | Addressed |
|---|---|---|---|---|
| Code Quality | 1 | - | - | 1 |
| Gas Optimization | 1 | - | - | 1 |
Kwenta was quick to respond to these issues.
Our understanding of the specification was based on the following sources:
The following source code was reviewed during the audit:
dbc1978719b2859edd3597efbae555629b61d021
43116650b4d7958b243dcb8aadfb921f9c2383a3
Specifically, we audited the following contracts within this repository:
| Contract | SHA256 |
|---|---|
| src/Zap.sol |
|
| src/ZapErrors.sol |
|
| src/ZapEvents.sol |
|
Note: This document contains an audit solely of the Solidity contracts listed above. Specifically, the audit pertains only to the contracts themselves, and does not pertain to any other programs or scripts, including deployment scripts.
Click on an issue to jump to it, or scroll down to see them all.
We quantify issues in three parts:
This third part – the severity level – is a summary of how much consideration the client should give to fixing the issue. We assign severity according to the table of guidelines below:
| Severity | Description |
|---|---|
|
(C-x) Critical |
We recommend the client must fix the issue, no matter what, because not fixing would mean significant funds/assets WILL be lost. |
|
(H-x) High |
We recommend the client must address the issue, no matter what, because not fixing would be very bad, or some funds/assets will be lost, or the code’s behavior is against the provided spec. |
|
(M-x) Medium |
We recommend the client to seriously consider fixing the issue, as the implications of not fixing the issue are severe enough to impact the project significantly, albiet not in an existential manner. |
|
(L-x) Low |
The risk is small, unlikely, or may not relevant to the project in a meaningful way. Whether or not the project wants to develop a fix is up to the goals and needs of the project. |
|
(Q-x) Code Quality |
The issue identified does not pose any obvious risk, but fixing could improve overall code quality, on-chain composability, developer ergonomics, or even certain aspects of protocol design. |
|
(I-x) Informational |
Warnings and things to keep in mind when operating the protocol. No immediate action required. |
|
(G-x) Gas Optimizations |
The presented optimization suggestion would save an amount of gas significant enough, in our opinion, to be worth the development cost of implementing it. |
In Zap.sol’s _zapOut() function, there is a check to ensure the _amount is greater than the _DECIMALS_FACTOR to prevent all of _amount to be lost to precision when converting from sUSDC’s 18 decimals to USDC’s 6 decimals. However, this check is made after external calls are made and state has been changed, without mutating _amount in the process.
/// @notice prior to unwrapping, ensure that there
/// is enough $sUSDC to unwrap
/// @custom:example if $USDC has 6 decimals, and
/// $sUSDC has greater than 6 decimals,
/// then it is possible that the amount of
/// $sUSDC to unwrap is less than 1 $USDC;
/// this contract will prevent such cases
/// @dev if $USDC has 6 decimals, and $sUSDC has 18 decimals,
/// precision may be lost
if (_amount < _DECIMALS_FACTOR) {
revert InsufficientAmount(_amount);
}
Reference: Zap.sol#L212-L223
Remediations to Consider
Move this check to the top of the function to more closely follow the Checks, Effects, and Interactions pattern, and refund users more gas if this check fails during execution.
In Zap.sol’s _zapIn() and _zapOut(), a referrer is passed in as a parameter and used in when either buying or selling sUSDC for sUSD. The intention of the referrer is to receive a portion of the fees of the spot market sale. However, in this case the assumption is that there will be no fees for this market, since the minimumAmountReceived is equal to the amount put in, meaning the sale will not execute unless there is a 1:1 exchange of sUSD and sUSDC, and no fees are taken.
/// @notice buy $sUSDC with $sUSD
/// @dev call will result in $sUSDC minted/transferred
/// to the Zap contract
_SPOT_MARKET_PROXY.buy({
marketId: _SUSDC_SPOT_MARKET_ID,
usdAmount: _amount,
minAmountReceived: _amount,
referrer: _referrer
});
Reference: Zap.sol#L192-L200
When executing a SynthetixV3 spot market buy/sell, additional logic is executed if the passed in referrer is non-zero:
function _collectReferrerFees(
Data storage self,
uint128 marketId,
OrderFees.Data memory fees,
address referrer,
SpotMarketFactory.Data storage factory,
Transaction.Type transactionType
) private returns (uint256 referrerFeesCollected) {
if (referrer == address(0)) {
return 0;
}
uint256 referrerPercentage = self.referrerShare[referrer];
referrerFeesCollected = fees.fixedFees.mulDecimal(referrerPercentage);
if (referrerFeesCollected > 0) {
if (Transaction.isSell(transactionType)) {
factory.synthetix.withdrawMarketUsd(marketId, referrer, referrerFeesCollected);
} else {
factory.usdToken.transfer(referrer, referrerFeesCollected);
}
}
}
Reference: MarketConfiguration.sol#L520-L542
Since the fees will be zero, passing in address(0) as the referrer saves an unnecessary SLOAD, and some execution totalling to roughly 2400 gas.
Remediations to Consider
Do not accept a referrer, or use address(0) in _zapIn() and _zapOut() to save users a bit of gas. It is important to note that the referrer is also logged in the SynthBought event, which may be desired for referrers despite the additional gas cost.
Macro makes no warranties, either express, implied, statutory, or otherwise, with respect to the services or deliverables provided in this report, and Macro specifically disclaims all implied warranties of merchantability, fitness for a particular purpose, noninfringement and those arising from a course of dealing, usage or trade with respect thereto, and all such warranties are hereby excluded to the fullest extent permitted by law.
Macro will not be liable for any lost profits, business, contracts, revenue, goodwill, production, anticipated savings, loss of data, or costs of procurement of substitute goods or services or for any claim or demand by any other party. In no event will Macro be liable for consequential, incidental, special, indirect, or exemplary damages arising out of this agreement or any work statement, however caused and (to the fullest extent permitted by law) under any theory of liability (including negligence), even if Macro has been advised of the possibility of such damages.
The scope of this report and review is limited to a review of only the code presented by the Kwenta team and only the source code Macro notes as being within the scope of Macro’s review within this report. This report does not include an audit of the deployment scripts used to deploy the Solidity contracts in the repository corresponding to this audit. Specifically, for the avoidance of doubt, this report does not constitute investment advice, is not intended to be relied upon as investment advice, is not an endorsement of this project or team, and it is not a guarantee as to the absolute security of the project. In this report you may through hypertext or other computer links, gain access to websites operated by persons other than Macro. Such hyperlinks are provided for your reference and convenience only, and are the exclusive responsibility of such websites’ owners. You agree that Macro is not responsible for the content or operation of such websites, and that Macro shall have no liability to your or any other person or entity for the use of third party websites. Macro assumes no responsibility for the use of third party software and shall have no liability whatsoever to any person or entity for the accuracy or completeness of any outcome generated by such software.