Security Audit
September 19, 2023
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 August 15, 2023 to August 28, 2023.
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 | 1 | - | - | 1 |
Low | 3 | - | 1 | 2 |
Code Quality | 6 | - | - | 6 |
Gas Optimization | 1 | - | - | 1 |
Kwenta was quick to respond to these issues.
Our understanding of the specification was based on the following sources:
There are a couple of changes related to trust assumption being introduced in V2 contracts that have not been present in V1:
Upgradability:
StakingRewardsV2
, RewardEscrowV2
, and EscrowMigrator
are now upgradable using the UUPS proxy.
Pausability:
StakingRewardsV2
, unstake
and unstakeEscrow
can now be paused by the owner (in addition to stake
and stakeEscrow
which were already pausable in V1)RewardEscrowV2
, depositing escrowed KWENTA (via importEscrowEntry
, createEscrowEntry
, appendVestingEntry
), vesting (via vest
), and transferring escrowed KWENTA can be paused by the ownerEscrowMigrator
, registering and migrating entries can be paused by the owner.Cooldown period:
Cooldown period was added to lock staked amount for a meaningful amount of time (default: 2 weeks) to discourage disruptive short term action (such as buying of votes).
In Addition, users migrating their KWENTA from V1 to V2 contracts need to be aware that there is a potential footgun where users need to overpay for migration. According to the Kwenta team, users are encouraged to follow the migration process provided on the Kwenta website to avoid loosing funds.
The following source code was reviewed during the audit:
5cc3ccc3817d41ad28e2b777450b308f460c9d4c
Specifically, we audited the following contracts within this repository:
Contract | SHA256 |
---|---|
EarlyVestFeeDistributor.sol |
|
EscrowMigrator.sol |
|
RewardEscrowV2.sol |
|
StakingRewardsV2.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.
getVestingQuantity
doesn’t consider duplicates
balanceAtTime
, escrowedbalanceAtTime
, and totalSupplyAtTime
can return different values for not-finalized block.
override
is not required
getVestingSchedules
and getAccountVestingEntryIDs
IERC20.sol
natspec
param description in constructors
escrowedbalanceAtTime
incorrectly spelled according to naming convention
Checkpoint
struct is not necessarily needed
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. |
Reference: RewardEscrowV2.sol#L405, RewardEscrowV2.sol#L410
Once migration starts, treasuryDAO
address in RewardEscrow.sol
is set to the address of the EscrowMigrator
contract, thus transferring all early vesting fees to the migrator. This is required for users who want to migrate their escrowed KWENTAs to the V2 contracts.
However, if a user has no intention to migrate, but only wants to vest the escrowed KWENTAs (without registering any entries on the migrator), any vesting fees will be transferred to the migrator contract where there is no possibilities to withdraw those KWENTAs and give it back to the treasuryDAO
.
Remediations to Consider
Consider adding a function to EscrowMigrator.sol
that allows to withdraw leftover KWENTAs that haven't been registered.
Note: The Kwenta team was already aware of this issue and had considered the plan of upgrading and sweeping the contract at a later date. After the recommendation from the Macro team, Kwenta decided to fix the issue preemptively.
Reference: EscrowMigrator.sol#L92-L93
EscrowMigrator.sol checks for zero address in the constructor for the parameters _rewardEscrowV1
and _rewardEscrowV2
, but is missing the zero address check for the staking parameters:
_stakingRewardsV1
_stakingRewardsV2
Remediation to Consider
Consider adding the missing zero address checks for above parameters.
getVestingQuantity
doesn’t consider duplicates
Reference: RewardEscrowV2.sol#L296
In RewardEscrowV2, getVestingQuantity
doesn’t work with duplicate entryIDs. Off-chain components and other contracts can call this function and might unintentionally pass duplicate entryIDs into the _entryIDs
array. As getVestingQuantity
double counts duplicate entries, a caller can make false assumption based on the wrong total
and totalFee
values returned.
Remediation to Consider
Consider handling duplicate entryIDs appropriately.
Decided it is not worth the gas costs to check for duplicates - hence we are pushing the responsibility to the calling contract not to pass in duplicate values.
balanceAtTime
, escrowedbalanceAtTime
, and totalSupplyAtTime
can return different values for not-finalized block.
Reference: StakingRewardsV2.sol#L509, StakingRewardsV2.sol#L519, StakingRewardsV2.sol#L529
In StakingRewards.sol, the function balanceAtTime
, escrowedbalanceAtTime
, and totalSupplyAtTime
can be used to retrieve the balance at a certain time in the past.
However, when those functions are called with a timestamp that equals the current block timestamp, then the functions might return inaccurate values as further transactions changing the balances can still occur within the same block.
Remediation to Consider
Consider reverting with an appropriate error if a timestamp is passed that equals block.timestamp
. If this is a scenario that should be supported, consider documenting it appropriately to prevent misinformation.
This is intended behaviour but we have added documentation to clarify it as suggested (rather than the reverting option - as this requires callers to implement extra logic, rather than just understanding the implications)
override
is not required
Since Solidity 0.8.8, when implementing an interface, those functions don't require the override
keyword anymore. In fact, this is misleading, as the function don't actual override any parent functions.
Consider removing the override
keyword from functions that only implement the function definition from the derived interface.
In EscrowMigrator.sol#L51, the comment says:
/// @notice Contract for RewardEscrowV1
But it should be RewardEscrowV2 instead.
In RewardEscrowV2.sol#L64, the comment says:
/// @notice Contract for StakingRewardsV2
IEscrowMigrator public escrowMigrator;
But it should be EscrowMigrator instead of StakingRewardsV2.
getVestingSchedules
and getAccountVestingEntryIDs
In RewardEscrowV2.sol, getVestingSchedules
reverts with InvalidIndex
when endIndex < index
, while getAccountVestingEntryIDs
returns an empty array in this case.
Consider implementing consistent behavior across those two functions.
IERC20.sol
In StakingRewardsV2.sol, IERC20
is imported from SafeERC20.sol:
import {IERC20} from "@openzeppelin/contracts/token/ERC20/utils/SafeERC20.sol";
However, SafeERC20 is not used anymore in V2 and thus it is preferred to directly import from IERC20.sol interface:
import {IERC20} from "@openzeppelin/contracts/token/ERC20/IERC20.sol";
natspec
param description in constructors
In StakingRewardsV2.sol, RewardEscrowV2.sol, and EscrowMigrator.sol, the constructor arguments are missing natspec
param descriptions.
Consider adding proper natspec
param descriptions for the constructor arguments.
escrowedbalanceAtTime
incorrectly spelled according to naming convention
In StakingRewardsV2.sol, functions and state variables use the lowerCamelCase naming convention. However, this is not the case for the newly introduced function escrowedbalanceAtTime
, which uses a lower b for balance (as opposed to e.g. escrowedBalanceOf
).
Consider renaming the function to escrowed**B**alanceAtTime
to follow the naming convention.
Checkpoint
struct is not necessarily needed
In StakingRewardsV2.sol, the following Checkpoint
struct is used:
struct Checkpoint {
// The timestamp when the value was generated
uint256 ts;
// The block number when the value was generated
uint256 blk;
// The value of the checkpoint
uint256 value;
}
In its current state, Checkpoint.blk
is not required anywhere in the code and checkpointing entirely relies on the timestamp Checkpoint.ts
.
Consider removing blk
from Checkpoint
struct to save gas.
We want to store the block number because incase we need it in the future. However to make this more agreeable we have used storage packing to fit the whole Checkpoint struct into a single slot so that it doesn’t make much difference anyway.
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.