Security Audit
August 12, 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 July 22 to July 25, 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 |
---|---|---|---|---|
Medium | 2 | - | - | 2 |
Low | 1 | - | 1 | - |
Code Quality | 6 | - | 2 | 4 |
Informational | 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:
ce5b0b11a84568269f410d4072106f03325df463
Specifically, we audited the following contracts within this repository:
Contract | SHA256 |
---|---|
./src/MarginPaymaster.sol |
|
./src/interfaces/external/IEngine.sol |
|
./src/interfaces/external/INftModule.sol |
|
./src/interfaces/external/IPerpsMarketProxy.sol |
|
./src/interfaces/external/IUniswapV3Pool.sol |
|
./src/interfaces/external/IV3SwapRouter.sol |
|
./src/interfaces/external/IWETH9.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.
postOp
will revert for any accountId
with zero withdrawable margin
accountId
ownership will be incorrectly sponsored
percentageMarkup
configuration setting
getHash()
function
depositToEntryPoint()
to be payable
swapUSDCToETH()
function for more flexible swapping
_zapIn()
is not used, so it can be removed
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. |
postOp
will revert for any accountId
with zero withdrawable margin
When executing the postOp()
logic, the MarginPaymaster
contract will attempt to pull assets from the user’s withdrawal margin if he does not have available USDC
tokens. To handle all potential revert scenarios, the withdrawFromMargin()
function checks that the proper accountId
is used and that the paymaster contract has the *PERPS_MODIFY_COLLATERAL_PERMISSION
* permission. After access control checks, the available withdrawal margin is checked and function execution returns if negative.
int256 withdrawableMargin = perpsMarketSNXV3.getWithdrawableMargin(
accountId
);
if (withdrawableMargin < 0) return 0;
Reference: MarginPaymaster.sol#L392-396
However, if the account's available margin is zero, the function will not return, and it will attempt to execute a modifyCollateral()
call with a zero amount:
uint256 withdrawableMarginUint = uint256(withdrawableMargin);
uint256 amountToPullFromMargin = min(
sUSDToWithdrawFromMargin,
withdrawableMarginUint
);
// pull sUSD from margin
perpsMarketSNXV3.modifyCollateral(
accountId,
sUSDId,
-int256(amountToPullFromMargin)
);
Reference: MarginPaymaster.sol#L397-409
This will cause the perpsMarketSNXV3.modifyCollateral()
to revert with an InvalidAmountDelta
error, causing the postOp()
to revert.
Remediations to Consider:
Consider returning 0
if the available withdrawal margin is ≤ 0
when verifying the withdrawableMargin
value.
accountId
ownership will be incorrectly sponsored
In the MarginPaymaster contract, the function withdrawFromMargin()
is responsible for recouping the transaction cost from the associated account’s collateral. When retrieving the owner of the corresponding account fails, it falls back to functionality that tries to withdraw assets from the first account associated with a particular user.
if (accountId != 0) {
// check if the account Id is valid
try snxV3AccountsModule.ownerOf(accountId) returns (address owner) {
// only allow the owners accounts to subsidise gas
if (owner != sender) return 0;
} catch {
// set accountId to zero, and then check if the sender has an account on-chain
accountId = 0;
}
}
Reference: MarginPaymaster.sol#L366-375
However, when retrieving the owner of the provided account does not fail, but instead returns a different owner, execution returns immediately instead and does not try to withdraw assets from the first account associated with a particular user.
As a result, if the caller provides the account of a different user, they will never be charged gas transaction costs. Instead, MarginPaymaster will be incorrectly sponsoring these transactions.
Remediations to Consider
Make the following change in if
branch
- if (owner != sender) return 0;
+ if (owner != sender) accountId = 0;
Reference: MarginPaymaster.sol#L370
percentageMarkup
configuration setting
In the MarginPaymaster contract, the owner may set and update the percentageMarkup value using setPercentageMarkup()
. Currently, there is no input value restriction, and high values for percentageMarkup
will result in charging the user more than expected.
Therefore, if a high percentageMarkup
value is set accidentally or intentionally by a compromised contract owner, it may drain the smart account’s balance and free-to-withdraw margin from an associated account on the SNXV3 perp market.
Remediations to Consider
percentageMarkup
value initialization and updates.Several important state-changing functions do not emit events.
setPercentageMarkup()
setAuthorizer()
Remediations to Consider
getHash()
function
The getHash()
function uses both paymasterAddress
and address(this)
as hash inputs. However, these two variables should have the same value, making the encoding of both redundant.
return
keccak256(
abi.encode(
...
uint256(bytes32(paymasterAddress)),
...
address(this)
)
);
Reference: MarginPaymaster.sol#L120-L136
Remediations to Consider
Consider validating that parsed paymasterAddress
is equal to address(this)
and removing one of those two from the input for hashing.
depositToEntryPoint()
to be payable
Currently, to deposit funds to the EntryPoint
contract, it is necessary first to send specific amount of native token directly to the MarginPaymaster
contract, and then call MarginPaymaster.depositToEntryPoint()
function.
However, by adding payable
modifier to the depositToEntryPoint()
function, funds can be deposited in one transaction.
Consider updating depositToEntryPoint()
function signature in the following way:
- function depositToEntryPoint(uint256 amount) external onlyOwner {
+ function depositToEntryPoint(uint256 amount) payable external onlyOwner {
Reference: MarginPaymaster.sol#L258
swapUSDCToETH()
function for more flexible swapping
Currently, the swapUSDCToETH()
function swaps all of the USDC in the MarginPaymaster
contract to ETH.
Consider addingusdcAmount
as an argument in the swapUSDCToETH()
function for more flexible swapping and having less risk, making the Uniswap pool volatile from swapping with the huge amount
Reference: MarginPaymaster.sol#L250
No logic change, added natspec
The current MarginPaymaster
contract is designed to use the Entrypoint version 0.6.0, released in April 2023. Some major optimizations and changes were deployed with the latest 0.7.0 version, as explicitly described in the release notes, while some were optimizing Paymaster integrations and solving potential issues.
Consider upgrading the Entrypoint version to 0.7.0.
_zapIn()
is not used, so it can be removed
The MarginPaymaster
contract inherits the Zap
contract, which contains 2 internal functions:
_zapIn()
, and_zapOut()
However, MarginPaymaster
only uses _zapOut()
.
Consider removing the _zapIn()
function as it is not used.
The MarginPaymaster relies on USDC and Synthetix v3 perpetual market module to calculate and pull assets on the operation sender’s behalf. Both external parties can prevent this contract from working:
USDC
blacklisting the MarginPaymaster address or the sender.This will essentially cause all UserOp
signed with this paymaster as a target to not be executed
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.