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Security Audit
March 20, 2024
Version 1.0.0
Presented by 0xMacro
This document includes the results of the security audit for Seven Seas's smart contract code as found in the section titled ‘Source Code’. The security audit was performed by the Macro security team on March 20th.
The purpose of this audit is to review the source code of certain Seven Seas 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 |
|---|---|---|---|---|
| Informational | 1 | - | - | - |
Seven Seas 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:
6bf5b2be6923ea1b972b80f4ef724bc103370d1f
Specifically, we audited the following contracts within this repository.
| Source Code | SHA256 |
|---|---|
| src/modules/price-router/Extensions/EtherFi/weETHExtension.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. |
The weEthExtension.sol prices wrapped eETH by converting it to eETH using the rate providers rate, then prices it as if it is normal wrapped ETH:
/**
* @notice Called during pricing operations.
* @dev asset not used since setup function confirms `asset` is weETH.
* @return price of weETH in USD
*/
function getPriceInUSD(ERC20) external view override returns (uint256) {
return
priceRouter.getPriceInUSD(wETH).mulDivDown(IRateProvider(address(weETH)).getRate(), 10 ** weETH.decimals());
}
Reference: weEthExtension.sol#L42-L50
Since eETH is exchangeable for ETH by withdrawing, it should always exchangeable for the same amount of ETH after waiting in a withdrawal queue. However, the market value of eETH can fluctuate from wETH due to numerous market conditions, which could lead to a large deviation in the values of these assets. Assuming a 1:1 peg may overvalue or undervalue positions that are priced based on weETH if the prices are diverged. This could open up arbitrage opportunities, or share price drops when rebalancing from positions priced using this extension, which could exceed allowed rebalance deviations. It is important to note that if there is a significant depegging of the price of eETH to ETH, strategists should consider withdrawing their weETH positions, as that will lead to a 1:1 conversion after the withdrawal queue delay.
The Cellar is already setup to use permissioned withdrawals, so it is a much riskier arbitrage option for attackers. In addition the strategists do have the ability to usntake eETH in the event of a major depeg.
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 Seven Seas 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.