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Security Audit
april 16, 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 February 7-11th 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 |
|---|---|---|---|---|
| High | 2 | - | - | 2 |
| Medium | 2 | - | - | 2 |
| Low | 1 | - | - | 1 |
| Code Quality | 2 | - | - | 2 |
Polynomial 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:
5af5661f339ccaf62129b8a883a298bcda86facc
Specifically, we audited the following contracts within this repository.
| Source Code | SHA256 |
|---|---|
| markets/perps-market/contracts/modules/GlobalPerpsMarketModule.sol |
|
| markets/perps-market/contracts/modules/LimitOrderModule.sol |
|
| markets/perps-market/contracts/modules/MarketConfigurationModule.sol |
|
| markets/perps-market/contracts/storage/GlobalPerpsMarketConfiguration.sol |
|
| markets/perps-market/contracts/storage/LimitOrder.sol |
|
| markets/perps-market/contracts/storage/OrderFee.sol |
|
| markets/perps-market/contracts/storage/PerpsMarket.sol |
|
| markets/perps-market/contracts/storage/PerpsMarketConfiguration.sol |
|
| markets/perps-market/contracts/utils/Flags.sol |
|
| protocol/synthetix/contracts/storage/Account.sol |
|
| protocol/synthetix/contracts/storage/AccountRBAC.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. |
For limit orders both long and short parties make a order of matching amount, but the price can be diverged from the current market price of the asset. The PnL is calculated for the change in position for the desired price on each side, however when settling the order the entire positions PnL is also evaluated at this desired price:
(runtime.pnl, , runtime.chargedInterest, runtime.accruedFunding, , ) = oldPosition.getPnl(
order.price
);
Reference: LimitOrderModule.sol#L346-348
function getPnl(
Data storage self,
uint256 price
)
internal
view
returns (
int256 totalPnl,
int256 pricePnl,
uint256 chargedInterest,
int256 accruedFunding,
int256 netFundingPerUnit,
int256 nextFunding
)
{
nextFunding = PerpsMarket.load(self.marketId).calculateNextFunding(price);
netFundingPerUnit = nextFunding - self.latestInteractionFunding;
accruedFunding = self.size.mulDecimal(netFundingPerUnit);
int256 priceShift = price.toInt() - self.latestInteractionPrice.toInt();
pricePnl = self.size.mulDecimal(priceShift);
chargedInterest = interestAccrued(self, price);
totalPnl = pricePnl + accruedFunding - chargedInterest.toInt();
}
Reference: Position.sol#L66-91
This results in the potential for an order to be filled at a extreme price that benefits a position when PnL is calculated at this arbitrary price.
Remediations to Consider
For calculating the whole positions PnL use the mark price rather than the limit order price to properly update the position.
For a limit order each party signs a relayer they trust to bring the other side of the order together and execute on it. It is verified that both orders have set the same relayer in validateLimitOrderPair():
if (shortOrder.relayer != longOrder.relayer) {
revert LimitOrderDifferentRelayer(shortOrder.relayer, longOrder.relayer);
}
Reference: LimitOrderModule.sol#L222-224
However there is no check to ensure that the caller is actually the relayer. This could lead to anyone settling orders provided they have the signatures, potentially leading to front-running orders pairing them pairs at potentially worse prices.
Remediations to Consider
Ensure that msg.sender is the requested trusted relayer.
_collectRelayerFees() is defined but never called
GlobalPerpsMarketConfiguration.sol was updated with the _collectRelayerFees() function, intended to allow for the relayer to receive fees owed. However this function is not called anywhere, preventing the relayer from receiving fees in the current state
Remediations to Consider
Add the ability for the relayer to receive fees owed.
Limit orders currently assume that the long price is larger than the short price for a given pair being settled. However there is no actual check to ensure that is the case.
Remediations to Consider
Ensure the short price is less than the long price when validating in validateLimitOrderPair().
ecrecover() is known to be vulnerable to signature malleability attacks which can lead to signature input while maintaining the same signer. Typically it is suggested to use Openzeppelins ECDSA library, or a similar solution that handles signature malleability.
Remediations to Consider
Handle signature malleability similar to how Openzeppelin does in ECDSA.
Limitorder.sol uses bitmaps to determine of an order has been filled for a accountId. This makes sense if the nonces are intended to be sequential, however the team intends to use non-sequential nonces which defeats the purpose of using a bitmap setup.
Remediations to Consider
Remove the use of bitmaps for nonces and use a conventional bool flag instead.
Not fixing to keep the storage logic same but will fix later
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.