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Security Audit
June 17, 2024
Version 1.0.0
Presented by 0xMacro
This document includes the results of the security audit for Polynomial's smart contract code as found in the section titled ‘Source Code’. The security audit was performed by the Macro security team on June 10th to June 12th 2024.
The purpose of this audit is to review the source code of certain Polynomial 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 | 2 | - | - | 2 |
| Code Quality | 1 | - | - | 1 |
Polynomial was quick to respond to these issues.
Our understanding of the specification was based on the following sources:
Similar to Syntheix V3, this protocol is upgradeable and has permissioned setters that can effect all aspects of the protocol which can effect stakers and market participants. Users of the protocol must trust that the owners and privileged roles will act in the best interest of the protocol and it’s users. A notable change from the Synthetix V3 architecture is the current state does not have decentralized governance, and the main owner will be set as a multisig, controlled by trusted members of the Polynomial protocol.
The following source code was reviewed during the audit:
7dd39667c7a991c39a0d819ca6534ad1e8f22149
Specifically, we audited the following contracts within this repository.
| Contract | SHA256 |
|---|---|
| packages/markets/perps-market/cannonfile.toml |
|
| packages/markets/spot-market/cannonfile.toml |
|
| packages/protocol/oracle-manager/cannonfile.toml |
|
| packages/protocol/synthetix/cannonfile.toml |
|
| polynomial-mainnet/cannonfile.toml |
|
| polynomial-mainnet/tomls/collaterals/susdc.toml |
|
| polynomial-mainnet/tomls/core.toml |
|
| polynomial-mainnet/tomls/markets/common/bigcap-settings.toml |
|
| polynomial-mainnet/tomls/markets/common/settlement-settings.toml |
|
| polynomial-mainnet/tomls/markets/perps-factory.toml |
|
| polynomial-mainnet/tomls/markets/spot-factory.toml |
|
| polynomial-mainnet/tomls/oracles/btc.toml |
|
| polynomial-mainnet/tomls/oracles/eth.toml |
|
| polynomial-mainnet/tomls/oracles/perps-keeper-cost.toml |
|
| polynomial-mainnet/tomls/oracles/pyth-btc.toml |
|
| polynomial-mainnet/tomls/oracles/pyth-eth.toml |
|
| polynomial-mainnet/tomls/permissions.toml |
|
| polynomial-mainnet/tomls/permit-all-perps-perpsSystem.toml |
|
| polynomial-mainnet/tomls/permit-deniers.toml |
|
| polynomial-mainnet/tomls/polynomial-mainnet-andromeda/collaterals/susdc.toml |
|
| polynomial-mainnet/tomls/polynomial-mainnet-andromeda/perps/btc-invokes.toml |
|
| polynomial-mainnet/tomls/polynomial-mainnet-andromeda/perps/btc.toml |
|
| polynomial-mainnet/tomls/polynomial-mainnet-andromeda/perps/eth-invokes.toml |
|
| polynomial-mainnet/tomls/polynomial-mainnet-andromeda/perps/eth.toml |
|
| polynomial-mainnet/tomls/polynomial-mainnet-andromeda/perps/global.toml |
|
| polynomial-mainnet/tomls/polynomial-mainnet-andromeda/perps/referrers.toml |
|
| polynomial-mainnet/tomls/polynomial-mainnet-andromeda/spot/usdc.toml |
|
| polynomial-mainnet/tomls/pools/main-pool.toml |
|
| polynomial-mainnet/tomls/settings.toml |
|
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 deployment of these contracts, setDeniers() is invoked in permit-deniers.toml, which allows the ability for these set addresses to effectively turn off the provided feature, in this case withdraw in the core contracts, and the perpsSystem in the perps market contract. The set deniers can do this via setFeatureFlagDenyAll() which sets flag.denyAll, which any check to ensureAccessToFeature(), for the particular feature, will then be prevented. This allows the set addresses to prevent users from interacting with the perps system, preventing actions like committing and canceling orders.
These deniers are expected to be trusted addresses that can quickly shut off functionality, which may be necessary to mitigate damage in the case of an exploit or other issues. However, in this case the addresses set are the same as those set by synthetix, rather than trusted members of the polynomial protocol. This could lead to these deniers shutting down the perps market maliciously, and also prevents the polynomial team from reacting to potential exploits.
Remediations to Consider
Change the addresses set to addresses trusted and controlled by Polynomial, to ensure this functionality will be used as intended and to benefit the protocol.
In global.toml, values are set that will be used to configure the perps markets. However, some of these values differ from the documentation of intended values, where each of the gradient values were intended to be set to 0:
[setting.perps_low_util_gradient]
defaultValue = "0.000025"
[setting.perps_gradient_breakpoint]
defaultValue = "0.80"
[setting.perps_high_util_gradient]
defaultValue = "0.01"
Reference: global.toml#L34-L41
This can lead to unintended effects on the perps market that may have a detrimental effect for users of the protocol.
Remediations to Consider
Set these global perps values to the intended values mentioned in the spec.
In Cannonfile.toml the perps market package uses version 3.318, but this should be set to 3.3.18 as that is the actual version of this package:
[setting.perps_market_package]
defaultValue = "fx-perps-market:3.318"
Reference: Cannonfile.toml#L47-L48
Remediations to Consider
Change the value to: "fx-perps-market:3.3.18"
In btc-invokes.toml and eth-invokes.toml the corresponding oracle is included:
include = ["../../oracles/btc.toml", "../../markets/common/bigcap-settings.toml"]
Reference: btc-invokes.toml#L1
However, these files sets up a chainlink oracle node for pricing either BTC or ETH, using a unset aggregator address. Chainlink currently doesn’t support the Polynomial network, so any chainlink type nodes will currently not work.
Remediations to Consider
Remove references to the chainlink oracles, btc.toml and eth.toml.
Cannon allows for depends values to be set for each call to invoke. This means that a call wont execute until after all its set dependancies have. Setting proper depends values for each call will ensure that execution occurs in the order expected, which can be important in cases where values are expected to be set within the call execution and prevents interaction with contracts that are yet to be deployed. Cannon automatically will detect these dependancies, but explicitly setting them ensures they are set correctly and as expect.
Remediations to Consider
Add dependancies to the relevant deployment calls to ensure proper execution order.
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 Polynomial 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.