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Malt Finance contest
Findings & Analysis Report


Table of contents


About C4

Code4rena (C4) is an open organization consisting of security researchers, auditors, developers, and individuals with domain expertise in smart contracts.

A C4 code contest is an event in which community participants, referred to as Wardens, review, audit, or analyze smart contract logic in exchange for a bounty provided by sponsoring projects.

During the code contest outlined in this document, C4 conducted an analysis of Malt Finance contest smart contract system written in Solidity. The code contest took place between November 25—December 1 2021.


35 Wardens contributed reports to the Malt Finance contest:

  1. WatchPug (jtp and ming)
  2. gzeon
  3. leastwood
  4. cmichel
  5. harleythedog
  6. 0x0x0x
  7. jayjonah8
  8. Meta0xNull
  9. hyh
  10. pauliax
  11. ScopeLift (wildmolasses, bendi, mds1)
  12. defsec
  13. gpersoon
  14. TomFrench
  15. stonesandtrees
  16. xYrYuYx
  17. GiveMeTestEther
  18. 0x1f8b
  19. ye0lde
  20. nathaniel
  21. robee
  22. pmerkleplant
  23. 0xwags
  24. Koustre
  25. danb
  26. BouSalman
  27. sabtikw
  28. hagrid
  29. tabish
  30. loop
  31. thank_you
  32. shenwilly

This contest was judged by Alex the Entreprenerd.

Final report assembled by CloudEllie and itsmetechjay.


The C4 analysis yielded an aggregated total of 78 unique vulnerabilities and 178 total findings. All of the issues presented here are linked back to their original finding.

Of these vulnerabilities, 5 received a risk rating in the category of HIGH severity, 30 received a risk rating in the category of MEDIUM severity, and 43 received a risk rating in the category of LOW severity.

C4 analysis also identified 25 non-critical recommendations and 75 gas optimizations.


The code under review can be found within the C4 Malt Finance contest repository, and is composed of 24 smart contracts written in the Solidity programming language and includes 4,452 source lines of Solidity code.

Severity Criteria

C4 assesses the severity of disclosed vulnerabilities according to a methodology based on OWASP standards.

Vulnerabilities are divided into three primary risk categories: high, medium, and low.

High-level considerations for vulnerabilities span the following key areas when conducting assessments:

  • Malicious Input Handling
  • Escalation of privileges
  • Arithmetic
  • Gas use

Further information regarding the severity criteria referenced throughout the submission review process, please refer to the documentation provided on the C4 website.

High Risk Findings (5)

[H-01] Timelock can be bypassed

Submitted by WatchPug, also found by 0x0x0x and gzeon

The purpose of a Timelock contract is to put a limit on the privileges of the governor, by forcing a two step process with a preset delay time.

However, we found that the current implementation actually won’t serve that purpose as it allows the governor to execute any transactions without any constraints.

To do that, the current governor can call Timelock#setGovernor(address _governor) and set a new governor effective immediately.

And the new governor can then call Timelock#setDelay() and change the delay to 0, also effective immediately.

The new governor can now use all the privileges without a delay, including granting minter role to any address and mint unlimited amount of MALT.

In conclusion, a Timelock contract is supposed to guard the protocol from lost private key or malicious actions. The current implementation won’t fulfill that mission.

  function setGovernor(address _governor)
    onlyRole(GOVERNOR_ROLE, "Must have timelock role")
    _swapRole(_governor, governor, GOVERNOR_ROLE);
    governor = _governor;
    emit NewGovernor(_governor);

  function setDelay(uint256 _delay)
    onlyRole(GOVERNOR_ROLE, "Must have timelock role")
      _delay >= 0 && _delay < gracePeriod,
      "Timelock::setDelay: Delay must not be greater equal to zero and less than gracePeriod"
    delay = _delay;

    emit NewDelay(delay);


Consider making setGovernor and setDelay only callable from the Timelock contract itself.

Specificaly, changing from onlyRole(GOVERNOR_ROLE, "Must have timelock role") to require(msg.sender == address(this), "...").

Also, consider changing _adminSetup(_admin) in Timelock#initialize() to _adminSetup(address(this)), so that all roles are managed by the timelock itself as well.

0xScotch (sponsor) confirmed

Alex the Entreprenerd (judge) commented:

The warden has identified an exploit that allows to sidestep the delay for the timelock, effectively bypassing all of the timelock’s security guarantees. Because of the gravity of this, I agree with the high risk severity.

Mitigation can be achieved by ensuring that all operations run under a time delay

[H-02] Unable to remove liquidity in Recovery Mode

Submitted by gzeon

According to

When the Malt price TWAP drops below a specified threshold (eg 2% below peg) then the protocol will revert any transaction that tries to remove Malt from the AMM pool (ie buying Malt or removing liquidity). Users wanting to remove liquidity can still do so via the UniswapHandler contract that is whitelisted in recovery mode.

However, in liquidity removed is directly sent to msg.sender, which would revert if it is not whitelisted

Liquidity should be removed to UniswapHandler contract, then the proceed is sent to msg.sender

0xScotch (sponsor) confirmed

Alex the Entreprenerd (judge) commented:

I believe this finding to be correct, because of the whitelisting on verifyTransfer, during recovery mode the removal of liquidity from UniSwapV2Pair will perform safeTransfers:

This means that the _beforeTokenTransfer will be called which eventually will call verifyTransfer which, if the price is below peg will revert.

Transfering the funds to the whitelisted contract should avoid this issue.

I’d like to remind the sponsor that anyone could deploy similar swapping contracts (or different ones such as curve), so if a person is motivate enough, all the whitelisting could technically be sidestepped.

That said, given the condition of LPing on Uniswap, the check and the current system would make it impossible to withdraw funds.

Because this does indeed compromises the availability of funds (effectively requiring the admin to unstock them manually via Whitelisting each user), I agree with High Severity

[H-03] getAuctionCore function returns wrong values out of order

Submitted by jayjonah8


In the AuctionEscapeHatch.sol file both earlyExitReturn() and \_calculateMaltRequiredForExit call the getAuctionCore() function which has 10 possible return values most of which are not used. It gets the wrong value back for the “active” variable since it’s the 10th argument but both functions have it as the 9th return value where “preAuctionReserveRatio” should be because of one missing comma. This is serious because these both are functions which deal with allowing a user to exit their arbitrage token position early. This can result in a loss of user funds.

Proof of Concept

Tools Used

Manual code review

In AuctionEscapeHatch.sol change the following in \_calculateMaltRequiredForExit() and earlyExitReturn() functions:


(,,,,, uint256 pegPrice, , uint256 auctionEndTime, bool active ) = auction.getAuctionCore(_auctionId);


(,,,,, uint256 pegPrice, , uint256 auctionEndTime, , bool active ) = auction.getAuctionCore(_auctionId);

0xScotch (sponsor) confirmed

Alex the Entreprenerd (judge) commented:

The warden identified a mistake in programming where the code would use the wrong returned value. Because of this, the entire protocol functionality can be compromised. As such I agree with High Severity

[H-04] AuctionBurnReserveSkew.getPegDeltaFrequency() Wrong implementation can result in an improper amount of excess Liquidity Extension balance to be used at the end of an auction

Submitted by WatchPug

  function getPegDeltaFrequency() public view returns (uint256) {
    uint256 initialIndex = 0;
    uint256 index;

    if (count > auctionAverageLookback) {
      initialIndex = count - auctionAverageLookback;

    uint256 total = 0;

    for (uint256 i = initialIndex; i < count; ++i) {
      index = _getIndexOfObservation(i);
      total = total + pegObservations[index];

    return total * 10000 / auctionAverageLookback;

When count < auctionAverageLookback, at L131, it should be return total * 10000 / count;. The current implementation will return a smaller value than expected.

The result of getPegDeltaFrequency() will be used for calculating realBurnBudget for auctions. With the result of getPegDeltaFrequency() being inaccurate, can result in an improper amount of excess Liquidity Extension balance to be used at the end of an auction.

0xScotch (sponsor) confirmed and disagreed with severity:

I actually think this should be higher severity. This bug could manifest in liquidity extension being depleted to zero which could have catastrophic consequences downstream.

Alex the Entreprenerd (judge) commented:

Agree with the finding, this is an incorrect logic in the protocol, which can limit it’s functionality and as the sponsor says: could have catastrophic consequences downstream as such I’ll increase the severity to high.

Mitigation seems to be straightforward

[H-05] AuctionEschapeHatch.sol#exitEarly updates state of the auction wrongly

Submitted by 0x0x0x

AuctionEschapeHatch.sol#exitEarly takes as input amount to represent how much of the

When the user exits an auction with profit, to apply the profit penalty less maltQuantity is liquidated compared to how much malt token the liquidated amount corresponds to. The problem is auction.amendAccountParticipation() simply subtracts the malt quantity with penalty and full amount from users auction stats. This causes a major problem, since in _calculateMaltRequiredForExit those values are used for calculation by calculating maltQuantity as follow:

uint256 maltQuantity = userMaltPurchased.mul(amount).div(userCommitment);

The ratio of userMaltPurchased / userCommitment gets higher after each profit taking (since penalty is applied to substracted maltQuantity from userMaltPurchased), by doing so a user can earn more than it should. Since after each profit taking users commitment corresponds to proportionally more malt, the user can even reduce profit penalties by dividing exitEarly calls in several calls.

In other words, the ratio of userMaltPurchased / userCommitment gets higher after each profit taking and user can claim more malt with less commitment. Furthermore after all userMaltPurchased is claimed the user can have userCommitment left over, which can be used to claimArbitrage, when possible.

Mitigation Step

Make sure which values are used for what and update values which doesn’t create problems like this. Rethink about how to track values of an auction correctly.

0xScotch (sponsor) confirmed

Alex the Entreprenerd (judge) commented:

The warden has identified an exploit that allows early withdrawers to gain more rewards than expected. Anytime “points” and rewards need to be earned over time, it’s ideal to accrue points in order to distribute them (see how Compound or AAVE tokens work) Because the warden showed a flow in the accounting logic for the protocol, I agree with high severity.

Medium Risk Findings (30)

[M-01] TIMELOCK_ROLE Has Absolute Power to Withdraw All FUND May Raise Red Flags for Investors

Submitted by Meta0xNull

TIMELOCK_ROLE Can Withdraw All FUND from the Contracts via emergencyWithdrawGAS(), emergencyWithdraw(), partialWithdrawGAS(), partialWithdraw().

While I believe developer have good intention to use these functions. It often associate with Rug Pull by developer in the eyes of investors because Rug Pull is not uncommon in Defi. Investors lose all their hard earn money.

Read More: $10.8M Stolen, Developers Implicated in Alleged Smart Contract ‘Rug Pull’

Read More: The Rise of Cryptocurrency Exit Scams and DeFi Rug Pulls

Proof of Concept

  1. Pause the Contract and Disable All Functions when Bad Thing Happen rather than Withdraw All Fund to a random address.
  2. If Withdraw Fund can’t avoid, a Multi Sig ETH Address should be hardcoded into the contract to ensure the fund move to a safe wallet.

0xScotch (sponsor) commented:

Duplicate of #263

Alex the Entreprenerd (judge) commented:

This is not a duplicate of #263, where 263 talks about sidestepping the delay of the timelock, this finding talks about the high degree of power that the TIMELOCK_ROLE has.

This is a typical “admin privilege” finding, it’s very important to disclose admin privileges to users so that they can make informed decisions

In this case the TIMELOCK_ROLE can effectively rug the protocol, however this is contingent on the account that has the role to pull the rug.

Because of its reliance on external factors, am downgrading the finding to medium severity

[M-02] Frontrunning in UniswapHandler calls to UniswapV2Router

Submitted by thankyou, also found by 0x0x0x, cmichel, defsec, harleythedog, hyh, Koustre, leastwood, Meta0xNull, pauliax, pmerkleplant, tabish, WatchPug, and xYrYuYx_

UniswapHandler utilizes UniswapV2Router to swap, add liquidity, and remove liquidity with the UniswapV2Pair contract. In order to utilize these functionalities, UniswapHandler must call various UniswapV2Router methods.

  • addLiquidity
  • removeLiquidity
  • swapExactTokensForTokens (swaps for both DAI and Malt)

In all three methods, UniswapV2Router requires the callee to provide input arguments that define how much the amount out minimum UniswapHandler will allow for a trade. This argument is designed to prevent slippage and more importantly, sandwich attacks.

UniswapHandler correctly handles price slippage when calling addLiquidity. However, that is not the case for removeLiquidity and swapExactTokensForTokens here and here. For both methods, 0 is passed in as the amount out minimum allowed for a trade. This allows for anyone watching the mempool to sandwich attack UniswapHandler (or any contract that calls UniswapHandler) in such a way that allows the hacker to profit off of a guaranteed trade.

How does this work? Let’s assume UniswapHandler makes a call to UniswapV2Router#swapExactTokensForTokens to trade DAI for Malt. Any hacker who watches the mempool and sees this transaction can immediately buy as much Malt as they want. This raises the price of Malt. Since UniswapHandler is willing to accept any amount out minimum (the number is set to zero), then the UniswapHandler will always trade DAI for Malt. This second transaction raises the price of Malt even further. Finally, the hacker trades their Malt for DAI, receiving a profit due to the artificially inflated price of Malt from the sandwich attack.

It’s important to note that anyone has access to the UniswapV2Router contract. There are no known ACL controls on UniswapV2Router. This sandwich attack can impact even the buyMalt function.

The following functions when called are vulnerable to frontrunning attacks:

And by extension the following contract functions since they also call the UniswapHandler function calls:

Proof of Concept

Refer to the impact section for affected code and links to the appropriate LoC.

The UniswapV2Router and UniswapV2Pair contract should allow only the UniswapHandler contract to call either contract. In addition, price slippage checks should be implemented whenever removing liquidity or swapping tokens. This ensures that a frontrunning attack can’t occur.

Anything Else We Should Know

I wish I had more time to work on this bug but unfortunately I have several current clients who require significant time from me. I’m happy to pursue this beyond the initial submission, in particular building a concrete PoC. I think the most important takeaway from this bug find is that anyone can purchase Malt at any time and anyone can manipulate the Malt reserve. This in turn impacts other functionalities that rely on the Malt reserve to make price/token calculations such as exiting an auction early or reinvesting rewards.

0xScotch (sponsor) confirmed

Alex the Entreprenerd (judge) commented:

Because transactions sit on the mempool (which is public, hence accessible by anyone), they can be frontrun, because of this swapping protocols (uniswap in this case) offer slippage checks. Setting the slippage checks allows a frontrunner to squeeze the maximum amount of value possible (sometimes the whole amount).

Because this applies to a leak of value, I believe medium severity to be correct

[M-03] AbstractRewardMine.sol#setRewardToken is dangerous

Submitted by 0x0x0x, also found by harleythedog and hyh

In case the reward token is changed, totalDeclaredReward will be changed and likely equal to 0. Since _userStakePadding and _globalStakePadding are accumulated, changing the reward token will not reset those values. Thus, it will create problems.


I think it would be the best to remove this function.

If you want to keep it, then it must have an event and it should be used by a timelock contract. Furthermore, it has to be used carefully and the new token should be distributed such that padding variables still make sense.

0xScotch (sponsor) confirmed

Alex the Entreprenerd (judge) commented:

Agree with highlighting the Admin Privilege, however because this is contingent on a malicious Admin, I’ll downgrade the finding to Medium Severity.

Mitigation could be done by ensuring old rewards are sent out, still claimable, or by making the rewardToken immutable

[M-04] The Power Structure is Too Centralized And Protocol May Break If Anything Happen to Admin

Submitted by Meta0xNull

There are a lot of different roles in Malt Finance to handle different tasks. All these roles only can set by Admin. If anything happen to Admin and he/she no longer available, the protocol will start countdown to the end of life.

Proof of Concept

  1. Some tasks don’t really need a special role like StabilizerNode. Should allow any community members to run their own StabilizerNode without approval needed.
  2. Consider transfer Admin to Multisig or DAO.

0xScotch (sponsor) disputed:

This is a known risk that is by design. We will migrate to DAO control of parameters when the protocol matures.

Alex the Entreprenerd (judge) commented:

I respect the wardens work for flagging this up. Because any of these exploits are contingent on the Admin being malicious, I’ll downgrade to Medium Severity

[M-05] _notSameBlock() can be circumvented in bondToAccount()

Submitted by gpersoon, also found by leastwood and ScopeLift

The function bondToAccount() of Bonding.sol has a check based on _notSameBlock() _notSameBlock() makes sure the same msg.sender cannot do 2 actions within the same block.

However this can be circumvented in this case: Suppose you call bondToAccount() via a (custom) smart contract, then the msg.sender will be the address of the smart contract. For a pseudo code proof of concept see below.

I’m not sure what the deeper reason is for the _notSameBlock() in bondToAccount(). But if it is important then circumventing this check it will pose a risk.

Proof of Concept

call function attack1.attack()

contract attack1 {
   function attack(address account, uint256 amount) {
         call attack2.forward(account, amount);
         call any other function of malt

contract attack2 {
   function forward(address account, uint256 amount) {
       call bonding.bondToAccount(account, amount); // uses msg.sender of attack2

function bondToAccount(address account, uint256 amount) public {
    if (msg.sender != offering) {

function _notSameBlock() internal {
    require( block.number > lastBlock[_msgSender()],"Can't carry out actions in the same block" );
    lastBlock[_msgSender()] = block.number;

Add access controls to the function bondToAccount() An end-user could still call bond()

0xScotch (sponsor) confirmed

Alex the Entreprenerd (judge) commented:

notSameBlock is effectively being used as the nonReentrant modifier, without the same security guarantees, as such, in spite of not having a specific attack vector, because the warden showed how to side step this security feature of the protocol, am going to raise the severity to Medium

[M-06] AbstractRewardMine - Re-entrancy attack during withdrawal

Submitted by ScopeLift

The internal _withdraw method does not follow the checks-effects-interactions pattern. A malicious token, or one that implemented transfer hooks, could re-enter the public calling function (such as withdraw()) before proper internal accounting was completed. Because the earned function looks up the _userWithdrawn mapping, which is not yet updated when the transfer occurs, it would be possible for a malicious contract to re-enter _withdraw repeatedly and drain the pool.

The internal accounting should be done before the transfer occurs:

function _withdraw(address account, uint256 amountReward, address to) internal {
    _userWithdrawn[account] += amountReward;
    _globalWithdrawn += amountReward;f

   rewardToken.safeTransfer(to, amountReward);

    emit Withdraw(account, amountReward, to);

0xScotch (sponsor) confirmed

Alex the Entreprenerd (judge) commented:

The warden identified a re-entrancy vulnerability that, given the right token would allow to drain the entirety of the contract.

Tokens with hooks (ERC777 and ERC677) would allow to exploit the contract and drain it in it’s entirety.

This is a very serious vulnerability. However it can happen exclusively on a malicious or a token with hooks, as such (while I recommend the sponsor to mitigate by following recommendation by the warden), the attack can be completely prevented by using a token without hooks.

For that reason I’ll rate the finding of medium severity (as it requires external conditions)

[M-07] MovingAverage.setSampleMemory() may broke MovingAverage, making the value of exchangeRate in StabilizerNode.stabilize() being extremely wrong

Submitted by WatchPug

function setSampleMemory(uint256 _sampleMemory)
  onlyRole(ADMIN_ROLE, "Must have admin privs")
  require(_sampleMemory > 0, "Cannot have sample memroy of 0");

  if (_sampleMemory > sampleMemory) {
    for (uint i = sampleMemory; i < _sampleMemory; i++) {
    counter = counter % _sampleMemory;
  } else {
    activeSamples = _sampleMemory;

    // TODO handle when list is smaller Tue 21 Sep 2021 22:29:41 BST

  sampleMemory = _sampleMemory;

In the current implementation, when sampleMemory is updated, the samples index will be malposition, making getValueWithLookback() get the wrong samples, so that returns the wrong value.

Proof of Concept

  • When initial sampleMemory is 10
  • After movingAverage.update(1e18) being called for 120 times
  • The admin calls movingAverage.setSampleMemory(118) and set sampleMemory to 118

The current movingAverage.getValueWithLookback(sampleLength * 10) returns 0.00000203312 e18, while it’s expeceted to be 1e18

After setSampleMemory(), getValueWithLookback() may also return 0or revert FullMath: FULLDIV_OVERFLOW at L134.


Consider removing setSampleMemory function.

0xScotch (sponsor) confirmed

Alex the Entreprenerd (judge) commented:

I agree that calling setSampleMemory will cause issues, and can cause opportunities to further extract value. However this can be triggered by an admin action. I’ll think about the severity, but as of now, because it is contingent on admin privilege, will downgrade to Medium

Alex the Entreprenerd (judge) commented:

I stand by my decision of Medium Severity. While the consequences can be troublesome, they are contingent on the admin breaking / griefing the system

[M-08] _getFirstSample returns wrong sample if count < sampleMemory

Submitted by cmichel

The MovingAverage.sol contract defines several variables that in the end make the samples array act as a ring buffer:

  • sampleMemory: The total length (buffer size) of the samples array. samples is initialized with sampleMemory zero observations.
  • counter: The pending sample index (modulo sampleMemory)

The _getFirstSample function computes the first sample as (counter + 1) % sampleMemory which returns the correct index only if the ring buffer is full, i.e., it wraps around. (in the counter + 1 >= sampleMemory).

If the samples array does not wrap around yet, the zero index should be returned instead.


Returning counter + 1 if counter + 1 < sampleMemory returns a zero initialized samples observation index. This then leads to a wrong computation of the TWAP.

Add an additional check for if (counter + 1 < sampleMemory) return 0 in _getFirstSample.

0xScotch (sponsor) confirmed and disagreed with severity:

Funds aren’t directly at risk. I believe this is medium severity

Alex the Entreprenerd (judge) commented:

Personally am not sure the first sample after wrapping would be counter + 1 (why not counter % sampleMemory)

That said, I do agree that before wrapping, the first item in the array is at the 0 index

I agree that the protocol is not behaving properly so I can understand the high severity, that said I also agree with the Sponsor’s statement, the worst case would be a leak of value, so Medium severity seems the most appropriate

[M-09] UniswapHandler.maltMarketPrice returns wrong decimals

Submitted by cmichel, also found by gzeon

The UniswapHandler.maltMarketPrice function returns a tuple of the price and the decimals of the price. However, the returned decimals do not match the computed price for the else if (rewardDecimals < maltDecimals) branch:

else if (rewardDecimals < maltDecimals) {
  uint256 diff = maltDecimals - rewardDecimals;
  price = (rewardReserves.mul(10**diff)).mul(10**rewardDecimals).div(maltReserves);
  decimals = maltDecimals;

Note that rewardReserves are in reward token decimals, maltReserves is a malt balance amount (18 decimals). Then, the returned amount is in rewardDecimals + diffDecimals + rewardDecimals - maltDecimals = maltDecimals + rewardDecimals - maltDecimals = rewardDecimals. However decimals = maltDecimals is wrongly returned.


Callers to this function will receive a price in unexpected decimals and might inflate or deflate the actual amount. Luckily, the AuctionEscapeHatch decides to completely ignore the returned decimals and as all prices are effectively in rewardDecimals, even if stated in maltDecimals, it currently does not seem to lead to an issue.


Fix the function by returning rewardDecimals instead of maltDecimals in the rewardDecimals < maltDecimals branch.

0xScotch (sponsor) confirmed

Alex the Entreprenerd (judge) commented:

Finding is valid, because the returned value is unused, I agree with the medium severity

[M-10] AuctionParticipant.sol: setReplenishingIndex mistake could freeze unclaimed tokens

Submitted by harleythedog

In AuctionParticipant.sol, the function setReplenishingIndex is an admin function that allows manually setting replenishingIndex. As I have shown in my two previous findings, I believe that this function could be called frequently. In my opinion (and Murphy’s law would agree), this implies that eventually an admin will accidentally set replenishingIndex incorrectly with this function.

Right now, setReplenishingIndex does not allow the admin to set replenishingIndex to a value smaller than it currently is. So, if an admin were to accidentally set this value too high, then it would be impossible to set it back to a lower value (the higher the value set, the worse this issue). All of the unclaimed tokens on auctions at smaller indices would be locked forever.

Proof of Concept

See code for setReplenishingIndex here:

Remove the require statement on line 136, so that an admin can set the index to a smaller value.

0xScotch (sponsor) confirmed

Alex the Entreprenerd (judge) commented:

Agree with the finding in that if the ADMIN were to increase the replenishingIndex then the unclaim tokens at auctions below the index wouldn’t be claimable anymore.

I believe the warden properly highlighted what an hypothetical abuse of admin privilege would look like. As such I’ll rate the finding with medium severity.

I don’t necessarily agree with the warden recommended mitigation, it may actually be best to simply delete the setter, or force it to go up by one index at a time after checking that all tokens are claimed

[M-11] No max for advanceIncentive

Submitted by gpersoon, also found by 0x1f8b

The function setAdvanceIncentive of DAO.sol doesn’t check for a maximum value of incentive. If incentivewould be very large, then advanceIncentive would be very large and the function advance() would mint a large amount of malt.

The function setAdvanceIncentive() can only be called by an admin, but a mistake could be made. Also if an admin would want to do a rug pull, this would be an ideal place to do it.

Proof of Concept

function setAdvanceIncentive(uint256 incentive)  externalonlyRole(ADMIN_ROLE, "Must have admin role") {
  advanceIncentive = incentive;

function advance() external {
..., advanceIncentive * 1e18);

Check for a reasonable maximum value in advance()

0xScotch (sponsor) confirmed and disagreed with severity:

Definitely need to guard against arbitrarily large incentives. Disagree the risk is medium though.

Alex the Entreprenerd (judge) commented:

Agree with the finding, this is an example of admin privilege, where the admin can set a variable which can be used to dilute the token and rug the protocol.

Because this is contingent on the admin’s action, I believe medium severity to be proper

Alex the Entreprenerd (judge) commented:

The simple rationale on the medium severity is that the owner could set the incentive to an exorbitant amount with the goal of minting a lot of tokens for an exit scam

[M-12] Permissions - return values not checked when sending ETH

Submitted by ScopeLift, also found by nathaniel

On lines 85 and 101, ETH is transferred using a .call to an address provided as an input, but there is no verification that the call call succeeded. This can result in a call to emergencyWithdrawGAS or partialWithdrawGAS appearing successful but in reality it failed. This can happen when the provided destination address is a contract that cannot receive ETH, or if the amount provided is larger than the contract’s balance

Proof of Concept

Enter the following in remix, deploy the Receiver contract, and send 1 ETH when deploying the Permissions contract. Call emergencyWithdrawGAS with the receiver address and you’ll see it reverts. This would not be caught in the current code

pragma solidity ^0.8.0;

contract Receivier{}

contract Permissions {
  constructor() payable {}

  function emergencyWithdrawGAS(address payable destination) external {
    (bool ok, ) ={value: address(this).balance}('');
    require(ok, "call failed");

Tools Used


In emergencyWithdrawGAS:

-{value: address(this).balance}('');
+ (bool ok, ) ={value: address(this).balance}('');
+ require(ok, "call failed");

And similar for partialWithdrawGAS

0xScotch (sponsor) confirmed

Alex the Entreprenerd (judge) commented:

Agree with the finding, I believe if a developer were to not use safeTransfer we’d rate as medium, so while I believe the impact to be minimal (no composability), I’ll keep the severity to medium

[M-13] Reducing the epoch length results in leaking value from advancement incentives

Submitted by TomFrench

Unintended advancement incentives being paid out to third party

Proof of Concept

DAO.sol incentives outside parties to advance the epoch by minting 100 MALT tokens for calling the advance function. This is limited by checking that the start timestamp of the next epoch has passed.

This start timestamp is calculated by multiplying the new epoch number by the length of an epoch and adding it to the genesis timestamp.

This method makes no accommodation for the fact that previous epochs may have been set to be a different length to what they are currently.

In the case where the epoch length is reduced, DAO will think that the epoch number can be incremented potentially many times. Provided the advanceIncentive is worth more than the gas necessary to advance the epoch will be rapidly advanced potentially many times paying out unnecessary incentives.

Rather than calculating from the genesis timestamp, store the last time that the epoch length was modified and calculate from there.

0xScotch (sponsor) confirmed

Alex the Entreprenerd (judge) commented:

Given a specific epoch length, the system will be able to determine which incentives to pay out. Because the math for calculating the next epoch is based on the initial time, changing the epochLength can cause unintended consequences and allow for further calls to advance with the goal of receiving more caller incentives.

The exploit can be triggered by admin privileges (changing epochLength), and because it’s a leak of value, I agree with medium severity

[M-14] Wrong permissions on reassignGlobalAdmin

Submitted by cmichel

The Permissions.reassignGlobalAdmin function is supposed to only be run with the TIMELOCK_ROLE role, see onlyRole(TIMELOCK_ROLE, "Only timelock can assign roles").

However, the TIMELOCK_ROLE is not the admin of all the reassigned roles and the revokeRole(role, oldAccount) calls will fail as it requires the ADMIN_ROLE.

The idea might have been that only the TIMELOCK should be able to call this function, and usually it is also an admin, but the function strictly does not work if the caller only has the TIMELOCK roll and will revert in this case. Maybe governance decided to remove the admin role from the Timelock, which makes it impossible to call reassignGlobalAdmin anymore as both the timelock and admin are locked out.

0xScotch (sponsor) confirmed

Alex the Entreprenerd (judge) commented:

The warden has identified a flaw in the roles implementation, while the system seems to work when the timelock has multiple roles, the name of the roles implies a different functionality than what can actually be done. The sponsor confirms. While I believe the impact in the demo setup to be fairly minor, because the finding shows a flow in the role setup, and the sponsor confirmed, I agree with medium severity

[M-15] Bonding doesn’t work with fee-on transfer tokens

Submitted by cmichel

Certain ERC20 tokens make modifications to their ERC20’s transfer or balanceOf functions. One type of these tokens is deflationary tokens that charge a certain fee for every transfer() or transferFrom().


The Bonding._bond() function will revert in the _balanceCheck when transferring a fee-on-transfer token as it assumes the entire amount was received.

To support fee-on-transfer tokens, measure the asset change right before and after the asset-transferring calls and use the difference as the actual bonded amount.

0xScotch (sponsor) confirmed

Alex the Entreprenerd (judge) commented:

Agree with the finding, the check will revert on a token that takes fees as the system assumes that amount is the amount that will be received

[M-16] theft of system profit

Submitted by danb, also found by leastwood and WatchPug

System profit comes from the stabilize function when the price of malt is above 1. Therefore it should not be allowed for anyone to take a part of the system profit when the price is above one. Right now, anyone can take a part of the investors’ profits, even if they don’t own any malt at all.

Proof of Concept

suppose that the price went up to 1.2 dai; the investors should get the reward for this rise. instead, anyone can take a part of the reward in the following steps: The price of malt is now 1.2 dai. Take a flash loan of a large amount of malt. Sell the malt for dai. Now the price went down to 1.1 dai because of the enormous swap. Call stabilize in order to lower the price to 1 dai. Buy malt to repay the flash loan at a lower cost with the bought dai. Repay the flash loan, and take the profit.

It is a sandwich attack because they sold malt for a high price, then they called stabilize to lower the value, then repurchase it for a low price.

The user made a profit at the expense of the investors.

If a user already has malt, it’s even easier: just sell all malt at a high cost.

in _beforeTokenTransfer, if the price is above 1$ and the receiver is the AMM pool, stabilize it.

Alex the Entreprenerd (judge) commented:

@0xScotch The warden says that if the price is above the peg price, the system should stabilize it From reading the PoolTransferVerification.verifyTransfer, the system wants you to trade when Malt is above peg (minus tolerance)

Would you say this finding is invalid?

0xScotch (sponsor) commented:

@0xScotch The warden says that if the price is above the peg price, the system should stabilize it From reading the PoolTransferVerification.verifyTransfer, the system wants you to trade when Malt is above peg (minus tolerance)

Would you say this finding is invalid?

I think the issue being pointed out is that the stabilization above peg can be sandwiched and some profit that would go to LPs can be extracted. I think this is an issue but its not absolutely critical.

We have discussed internally how to deal with this and the suggestion of calling stabilize would require some additional logic in the transfer verification as it would create a circular execution path.

  1. User tries to sell at 1.2
  2. Transfer verifier triggers stabilize
  3. StabilizerNode tries to sell Malt ahead of initial user
  4. Transfer verifier runs again and will call stabilize again unless we modify it to deal with this case.

I don’t think that is an issue but we will consider how to best move ahead with it.

Alex the Entreprenerd (judge) commented:

Let’s dissect the warden’s finding:

The price of malt is now 1.2 dai.
Take a flash loan of a large amount of malt.
Sell the malt for dai.
Now the price went down to 1.1 dai because of the enormous swap.
Call stabilize in order to lower the price to 1 dai.
Buy malt to repay the flash loan at a lower cost with the bought dai.
Repay the flash loan, and take the profit.

-> Flashloan Malt (assumes liquidity to do so, but let’s allow that) -> Sell malt for dai -> price goes lower -> Call stabilize -> system reduces price even further -> Buy back the malt -> repay the loan

I feel like this is something that can’t really be avoided as due to the permissionless nature of liquidity pools, limiting the ability to sell or buy to a path will be sidestepped by having other pools being deployed to avoid those checks.

That said, the warden has identified a way to leak value from the price control system.

To be precise the value is being extracted against traders, as to get Malt to 1.2 you’d need a trader to be so aggressive in their purchase to push the price that high. The warden showed how any arber / frontrunner can then “steal” the potential profits of the malt system users by frontrunning them.

Due to the profit extraction nature of the finding, I believe Medium Severity to be correct

[M-17] Auction collateralToken won’t work if token is fee-on-transfer token

Submitted by harleythedog

There are several ERC20 tokens that take a small fee on transfers/transferFroms (known as “fee-on-transfer” tokens). Most notably, USDT is an ERC20 token that has togglable transfer fees, but for now the fee is set to 0 (see the contract here: For these tokens, it should not be assumed that if you transfer x tokens to an address, that the address actually receives x tokens. In the current test environment, DAI is the only collateralToken available, so there are no issues. However, it has been noted that more pools will be added in the future, so special care will need to be taken if fee-on-transfer tokens (like USDT) are planned to be used as collateralTokens.

For example, consider the function purchaseArbitrageTokens in Auction.sol. This function transfers realCommitment amount of collateralToken to the liquidityExtension, and then calls purchaseAndBurn(realCommitment) on the liquidityExtension. The very first line of purchaseAndBurn(amount) is require(collateralToken.balanceOf(address(this)) >= amount, "Insufficient balance");. In the case of fee-on-transfer tokens, this line will revert due to the small fee taken. This means that all calls to purchaseArbitrageTokens will fail, which would be very bad when the price goes below peg, since no one would be able to participate in this auction.

Proof of Concept

See purchaseArbitrageTokens here:

See purchaseAndBurn here:

Add logic to transfers/transferFroms to calculate exactly how many tokens were actually sent to a specific address. In the example given with purchaseArbitrageTokens, instead of calling purchaseAndBurn with realCommitment, the contract should use the difference in the liquidityExtension balance after the transfer minus the liquidityExtension balance before the transfer.

0xScotch (sponsor) confirmed

Alex the Entreprenerd (judge) commented:

Agree with the finding, the system as a whole seem to not deal with feeOnTransfer Token Mitigation can be as simple as never using them, or refactoring to check for actual amounts received

[M-18] AuctionParticipant.sol: purchaseArbitrageTokens should not push duplicate auctions

Submitted by harleythedog

In AuctionParticpant.sol, every time purchaseArbitrageTokens is called, the current auction is pushed to auctionIds. If this function were to be called on the same auction multiple times, then the same auction id would be pushed multiple times into this array, and the claim function would have issues with replenishingIndex.

Specifically, even if replenishingIndex was incremented once in claim, it is still possible that the auction at the next index will never reward any more tokens to the participant, so the contract would need manual intervention to set replenishingIndex (due to the if statement on lines 79-82 that does nothing if there is no claimable yield).

It is likely that purchaseArbitrageTokens would be called multiple times on the same auction. In fact, the commented out code for handleDeficit (in ImpliedCollateralService.sol) even suggests that the purchases might happen within the same transaction. So this issue will likely be an issue on most auctions and would require manual setting of replenishingIndex.

NOTE: This is a separate issue from the one I just submitted previously relating to replenishingIndex. The previous issue was related to an edge case where replenishingIndex might need to be incremented by one if there are never going to be more claims, while this issue is due to duplicate auction ids.

Proof of Concept

See code for purchaseArbitrageTokens here:

Notice that currentAuction is always appended to auctionIds.

Add a check to the function to purchaseArbitrageTokens to ensure that duplicate ids are not added. For example, this can be achieved by changing auctionIds to a mapping instead of an array.

0xScotch (sponsor) confirmed

Alex the Entreprenerd (judge) commented:

I agree with the finding, adding the same auctionId can lead to undefined behaviour. This can break claiming of incentives. Because of that, I think medium severity to be appropriate

[M-19] MiningService.setBonding should use BONDING role instead of REINVESTOR one

Submitted by hyh

BONDING_ROLE cannot be managed after it was initialized.

Proof of Concept

setBonding set the wrong role via _swapRole:

Set BONDING_ROLE instead of REINVESTOR_ROLE in setBonding function:


function setBonding(address _bonding)
  onlyRole(ADMIN_ROLE, "Must have admin privs")
  require(_bonding != address(0), "Cannot use address 0");
  _swapRole(_bonding, bonding, REINVESTOR_ROLE);
  bonding = _bonding;

To be:

function setBonding(address _bonding)
  onlyRole(ADMIN_ROLE, "Must have admin privs")
  require(_bonding != address(0), "Cannot use address 0");
  _swapRole(_bonding, bonding, BONDING_ROLE);
  bonding = _bonding;

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[M-20] Users Can Contribute To An Auction Without Directly Committing Collateral Tokens

Submitted by leastwood

purchaseArbitrageTokens enables users to commit collateral tokens and in return receive arbitrage tokens which are redeemable in the future for Malt tokens. Each auction specifies a commitment cap which when reached, prevents users from participating in the auction. However, realCommitment can be ignored by directly sending the LiquidityExtension contract collateral tokens and subsequently calling purchaseArbitrageTokens.

Proof of Concept

Consider the following scenario:

  • An auction is currently active.
  • A user sends collateral tokens to the LiquidityExtension contract.
  • The same user calls purchaseArbitrageTokens with amount 0.
  • The purchaseAndBurn call returns a positive purchased amount which is subsequently used in auction calculations.

As a result, a user could effectively influence the average malt price used throughout the Auction contract.

Consider adding a check to ensure that realCommitment != 0 in purchaseArbitrageTokens.

0xScotch (sponsor) confirmed

Alex the Entreprenerd (judge) commented:

The warden has identified a way to side-step the cap on commitments. Because the commitments are used for calculating limits, but maltPurchased is used to calculate rewards, an exploiter can effectively use an auction to purchase as many arbitrage tokens as they desire.

Using any amount greater than zero will eventually allow to end the auction, however, by using 0 this process can be repeated continuously.

Agree with the finding and severity

[M-21] StabilizerNode Will Mint An Incentive For Triggering An Auction Even If An Auction Exists Already

Submitted by leastwood

_startAuction utilises the SwingTrader contract to purchase Malt. If SwingTrader has insufficient capital to return the price of Malt back to its target price, an auction is triggered with the remaining amount. However, no auction is triggered if the current auction exists, but msg.sender is still rewarded for their call to stabilize.

Proof of Concept

_shouldAdjustSupply initially checks if the current auction is active, however, it does not check if the current auction exists. There is a key distinction between the auctionActive and auctionExists functions which are not used consistently. Hence, an auction which is inactive but exists would satisfy the edge case and result in triggerAuction simply returning.

Consider using auctionExists and auctionActive consistently in StabilizerNode and Auction to ensure this edge case cannot be abused.

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Alex the Entreprenerd (judge) commented:

The warden found a way to effectively mint free malt by spamming the caller incentive by abusing a specific edge case.

[M-22] _calculateMaltRequiredForExit Uses Spot Price To Calculate Malt Quantity In exitEarly

Submitted by leastwood

_calculateMaltRequiredForExit in AuctionEscapeHatch currently uses Malt’s spot price to calculate the quantity to return to the exiting user. This spot price simply tracks the Uniswap pool’s reserves which can easily be manipulated via a flash loan attack to extract funds from the protocol.

Proof of Concept

Consider implementing/integrating a TWAP oracle to track the price of Malt.

0xScotch (sponsor) confirmed

Alex the Entreprenerd (judge) commented:

I feel like this issue highlights the design challenge that the sponsor will have to solve, on one hand the protocol is meant to stabilize the price of malt in specific pools (impossible to block / control every pool due to permissionless nature). At the same time in order to determine which direction to move the price to, they need to refer to the pricing of the underlying pools (in this case a UniV2Pool, most likely from QuickSwap)

Personally I understand the finding and think it’s valid, however I don’t believe there’s easy answers as to how the sponsor should address this.

Whenever there’s excess value there will be entities trying to seize it and perhaps through such a harsh environment this protocol can truly find a way to be sustainable.

That said, I’ll mark the finding as valid, but believe this specific issue underlines the challenges that await the sponsor in making the protocol succesful

[M-23] addLiquidity Does Not Reset Approval If Not All Tokens Were Added To Liquidity Pool

Submitted by leastwood

addLiquidity is called when users reinvest their tokens through bonding events. The RewardReinvestor first transfers Malt and rewards tokens before adding liquidity to the token pool. addLiquidity provides protections against slippage by a margin of 5%, and any dust token amounts are transferred back to the caller. In this instance, the caller is the RewardReinvestor contract which further distributes the dust token amounts to the protocol’s treasury. However, the token approval for this outcome is not handled properly. Dust approval amounts can accrue over time, leading to large Uniswap approval amounts by the UniswapHandler contract.

Proof of Concept

Consider resetting the approval amount if either maltUsed < maltBalance or rewardUsed < rewardBalance in addLiquidity.

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Alex the Entreprenerd (judge) commented:

The UniV2Router will first calculate the amounts and then pull them from the msg.sender

This means that approvals may not be fully utilized, leaving traces of approvals here and there. This can cause issues with certain tokens (USDT comes to mind), and will also not trigger gas refunds.

[M-24] _distributeRewards Does Not Reset Approval If Not All Tokens Were Allocated

Submitted by leastwood

_distributeRewards attempts to reward LP token holders when the price of Malt exceeds its price target. Malt Finance is able to being Malt back to its peg by selling Malt and distributing rewards tokens to LP token holders. An external call to Auction is made via the allocateArbRewards function. Prior to this call, the StabilizerNode approves the contract for a fixed amount of tokens, however, the allocateArbRewards function does not necessarily utilise this entire amount. Hence, dust token approval amounts may accrue from within the StabilizerNode contract.

Proof of Concept

Consider resetting the approval amount if the input rewarded amount to allocateArbRewards is less than the output amount.

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Alex the Entreprenerd (judge) commented:

Finding is valid, incorrect approvals can cause reverts (USDT being an example), and not fully resetting will also negate gas refunds

[M-25] AMM pool can be drained using a flashloan and calling stabilize

Submitted by stonesandtrees

All of the rewardToken in a given AMM pool can be removed from the AMM pool and distributed as LP rewards.

Proof of Concept

In the stabilize method in the StabilizerNode the initial check to see if the Malt price needs to be stabilized it uses a short period TWAP:

However, if the price is above the threshold for stabilization then the trade size required to stabilize looks at the AMM pool directly which is vulnerable to flashloan manipulation.


  1. Wait for TWAP to rise above the stabilization threshold
  2. Flashloan remove all but a tiny amount of Malt from the pool.
  3. Call stabilize. This will pass the TWAP check and execute _distributeSupply which in turn ultimately calls _calculateTradeSize in the UniswapHandler. This calculation will determine that almost all of the rewardToken needs to be removed from the pool to return the price to peg.
  4. Malt will mint enough Malt to remove a lot of the rewardToken from the pool.
  5. The protocol will now distribute that received rewardToken as rewards. 0.3% of which goes directly to the attacker and the rest goes to LP rewards, swing trader and the treasury.

The amount of money that can be directly stolen by a malicious actor is small but it can cause a lot of pain for the protocol as the pool will be destroyed and confusion around rewards will be created.

Use a short TWAP to calculate the trade size instead of reading directly from the pool.

0xScotch (sponsor) confirmed

Alex the Entreprenerd (judge) commented:

I believe the warden has identified a valid grief and potential exploit

I’m not convinced on the simplicity of: 2. Flashloan remove all but a tiny amount of Malt from the pool.

You’d have to buy that liquidity in order to be able to remove the malt, which effectively makes the operation not as straightforward (if not unprofitable for the attacker).

I do believe the grief can be performed but in lack of a clear incentive for the attacker, am going to downgrade to Medium Severity. Can be done, but not clear on the incentives

[M-26] Dutch auction can be manipulated

Submitted by gzeon

When malt is under-peg and the swing trader module do not have enough capital to buy back to peg, a Dutch auction is triggered to sell arb token. The price of the Dutch auction decrease linearly toward endprice until _endAuction() is called.

_endAuction() is called in

  1. When auction.commitments >= auction.maxCommitments

  1. On stabilize() -> checkAuctionFinalization() -> _checkAuctionFinalization()

  1. On stabilize() ->_startAuction() -> triggerAuction() -> _checkAuctionFinalization()

It is possible manipulate the dutch auction by preventing _endAuction() being called.

Proof of Concept

Consider someone call purchaseArbitrageTokens with auction.maxCommitments minus 1 wei, _endAuction won’t be called because auction.commitments < auction.maxCommitments. Further purchase would revert because purchaseAndBurn ( would likely revert since swapping 1 wei in most AMM will fail due to rounding error. Even if it does not revert, there is no incentive to waste gas to purchase 1 wei of token.

As such, the only way for the auction to finalize is to call stabilize(). However, this is not immediately possible because it require block.timestamp >= stabilizeWindowEnd where stabilizeWindowEnd = block.timestamp + stabilizeBackoffPeriod stabilizeBackoffPeriod is initially set to 5 minutes in the contract

After 5 minute, stabilize() can be called by anyone. By using this exploit, an attacker can guarantee he can purchase at (startingPrice+endingPrice)/2 or lower, given the default 10 minute auctionLength and 5 minute stabilizeBackoffPeriod. (unless a privileged user call stabilize() which override the stability window)

Also note that stabilize() might not be called since there is no incentive.

  1. Incentivize stabilize() or incentivize a permission-less call to _endAuction()
  2. Lock-in auction price when user commit purchase

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Alex the Entreprenerd (judge) commented:

By purchasing all but 1 wei of arbitrageTokens, any caller can guarantee that the auction will offer the steepest discount.

This is caused by the fact that AMMs (esp UniV2) will revert with small numbers, as rounding will cause the amountOut to == 0 which will cause a INSUFFICIENT_AMOUNT revert.

I agree with the pre-conditions and the possibility of this to happen. In a sense I believe this can become the meta strategy that every dutch auction participant will use (the fight between buyers will be done by paying gas to be the first few to buy arbitrageTokens).

So the question is how to avoid it. I guess purchasing at a time should lock the price for that particular buyer at that particular time (adding a mapping should increase cost of 20k on write and a few thousand gas on read).

Alex the Entreprenerd (judge) commented:

TODO: Decide on severity

Medium for sure, extract value reliably. Is it high though? Arguably the dutch auction is not properly coded as it allows to get a further discount instead of locking in a price for the user at time of deposit

Alex the Entreprenerd (judge) commented:

While an argument for the Dutch Auction being coded wrong (user locking in price) can be made, that’s not the definition of a Dutch Auciton

Screenshot 2022-01-26 at 14 16 34

So arguably the dutch auction is properly coded, it’s that there’s a specific way to sidestep it which is caused by:

  • 1 wei tx reverting on swap
  • sum of purchases not being enough

For this conditions to happen the “exploiter” needs to be fast enough to place an order, in such a way that their order will leave 1 commitment left. I can imagine them setting up a contract that reverts if this condition isn’t met and that checks for w/e amount is needed at that time.

I would assume that having an admin privileged function to close the auction prematurely would solve this specific attack.

I believe that the warden has identified a fairly reliable way to get a discount from the protocol because of the impact and some of the technicalities I believe Medium Severity to be more appropriate. This will be exploited, but in doing so will make the protocol successful (all auction full minus 1 wei), the premium / discount will be reliable predicted (50% between start and end) and as such I believe it will be priced in

[M-27] Slippage checks when adding liquidity are too strict

Submitted by cmichel

When adding liquidity through UniswapHandler.addLiquidity, the entire contract balances are used to add liquidity and the min amounts are set to 95% of these balances. If the balances in this contract are unbalanced (the ratio is not similar to the current Uniswap pool reserve ratios) then this function will revert and no liquidity is added.

See UniswapHandler.buyMalt:

(maltUsed, rewardUsed, liquidityCreated) = router.addLiquidity(
  maltBalance, // @audit-info amountADesired
  // @audit assumes that whatever is in this contract is already balanced. good assumption?
  maltBalance.mul(95).div(100), // @audit-info amountAMin
  msg.sender, // transfer LP tokens to sender


If the contract has unbalanced balances, then the router.addLiquidity call will revert. Note that an attacker could even send tokens to this contract to make them unbalanced and revert, resulting in a griefing attack.

It needs to be ensured that the balances in the contract are always balanced and match the current reserve ratio. It might be better to avoid directly using the balances which can be manipulated by transferring tokens to the contract and accepting parameters instead of how many tokens to provide liquidity with from the caller side.

0xScotch (sponsor) confirmed

Alex the Entreprenerd (judge) commented:

Interestingly the warden highlights the other side of the “missing slippage check” argument. Slippage checks in general need to be calculated offChain (as you will get frontrun in the mempool, so the slippage check is a risk minimization tool more than anything else)

The warden also specified a griefing attack that can be used because of the hardcoded check. The sponsor confirms, I think medium severity is appropriate

[M-28] Bonding.sol _unbondAndBreak does not account for edge case where no tokens are returned

Submitted by harleythedog

In Bonding.sol, the internal function _unbondAndBreak transfers a user’s stake tokens to the dexHandler and then calls removeLiquidity on the dexHandler. Within the Uniswap handler (which is the only handler so far) removeLiquidity takes special care in the edge case where router.removeLiquidity returns zero tokens. Specifically, the Uniswap handler has this code:

if (amountMalt == 0 || amountReward == 0) {
  liquidityBalance = lpToken.balanceOf(address(this));
  lpToken.safeTransfer(msg.sender, liquidityBalance);
  return (amountMalt, amountReward);

If this edge case does indeed happen (i.e. if something is preventing the Uniswap router from removing liquidity at the moment), then the Uniswap handler will transfer the LP tokens back to Bonding.sol. However, Bonding.sol does not have any logic to recognize that this happened, so the LP tokens will become stuck in the contract and the user will never get any of their value back. This could be very bad if the user unbonds a lot of LP and they don’t get any of it back.

Proof of Concept

See _unbondAndBreak here:

Notice how the edge case where amountMalt == 0 || amountReward == 0 is not considered in this function, but it is considered in the Uniswap handler’s removeLiquidity here:

Add a similar edge case check to _unbondAndBreak. In the case where LP tokens are transferred back to Bonding.sol instead of malt/reward, these LP tokens should be forwarded back to the user since the value is rightfully theirs.

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Alex the Entreprenerd (judge) commented:

In the then case the tokens will be sent back to the Bonding.sol contract, which has no way of rescuing or returning the tokens, probably reverting would be a better solution.

Because the warden identified a way for tokens to get stucked, I think Medium Severity to be appropriate

[M-29] User can bypass Recovery Mode via UniswapHandler to buy Malt

Submitted by gzeon

One of the innovative feature of Malt is to block buying while under peg. The buy block can be bypassed by swapping to the whitelisted UniswapHandler, and then extract the token by abusing the add and remove liquidity function. This is considered a high severity issue because it undermine to protocol’s ability to generate profit by the privileged role as designed and allow potential risk-free MEV.

Proof of Concept

  1. User swap dai into malt and send malt directly to uniswapHandler, this is possible becuase uniswapHandler is whitelisted

swapExactTokensForTokens(amountDai, 0, [dai.address, malt.address], uniswapHandler.address, new Date().getTime() + 10000); 2) User send matching amount of dai to uniswapHandler 3) User call addLiquidity() and get back LP token 4) User call removeLiquidity() and get back both dai and malt

According to documentation in

Users wanting to remove liquidity can still do so via the UniswapHandler contract that is whitelisted in recovery mode.

, this should be exploitable. Meanwhile the current implementation did not actually allow remove liquidity during recovery mode (refer to issue “Unable to remove liquidity in Recovery Mode”) This exploit can be mitigated by disabling addLiquidity() when the protocol is in recovery mode

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Alex the Entreprenerd (judge) commented:

The Malt token is programmed to explicitly prevent buying it when at discount. However, because addLiquidity and removeLiquidity are callable by anyone, and the UniswapHandler is whitelisted, through a calculated addition and removal of liquidity anyone can mimick buying Malt for a discount (by providing imbalanced underlying and redeeming them).

I believe this sidesteps the majority of the functionality of the protocol, and while the attack is fairly simple, it denies the protocol functionality and as such agree with a High Severity

Alex the Entreprenerd (judge) commented:

After re-review: Addressing each step:

  1. The swap can be done as the whitelisting is bypassed (so finding is valid on that end)
  2. User can send more liquidity
  3. User can add liquidity at discount (as they bought at discount) (notice that this subjects them to potentially more IL so arguably the MEV extraction happened at step 1)
  4. This cannot be done because of #323 which was found by the same warden. As per #323 you can’t remove liquidity as the transfer will be from pool to user and as such will be reverted due to the system being in recovery mode.

I believe that the warden identified a way to sidestep purchasing malt via purchase -> send to UniswapHandler -> add liquidity which should allow for some MEV extraction (with the user risking IL as they assume malt will go back to peg)

Because of this there’s still some validity to the finding, but it’s not as dire as I originally believed.

I’m going to downgrade the finding to Medium Severity as:

  1. Value can be extracted
  2. by bypassing the check for buying malt

But this doesn’t allow the selling of malt, so it’s not a protocol breaking exploit but rather a way to gain MEV.

[M-30] Malt Protocol Uses Stale Results From MaltDataLab Which Can Be Abused By Users

Submitted by leastwood

MaltDataLab integrates several MovingAverage contracts to fetch sensitive data for the Malt protocol. Primary data used by the protocol consists of the real value for LP tokens, the average price for Malt and average reserve ratios. trackMaltPrice, trackPoolReserves and trackPool are called by a restricted role denoted as the UPDATER_ROLE and represented by an EOA account and not another contract. Hence, the EOA account must consistently update the aforementioned functions to ensure the most up-to-date values. However, miners can censor calls to MaltDataLab and effectively extract value from other areas of the protocol which use stale values.

Proof of Concept

Consider the following attack vector:

  • The price of Malt exceeds the lower bound threshold and hence stabilize can be called by any user.
  • The _stabilityWindowOverride function is satisfied, hence the function will execute.
  • The state variable, exchangeRate, queries maltPriceAverage which may use an outdated exchange rate.
  • _startAuction is executed which rewards msg.sender with 100 Malt as an incentive for triggering an auction.
  • As the price is not subsequently updated, a malicious attacker could collude with a miner to censor further pool updates and continue calling stabilize on every fastAveragePeriod interval to extract incentive payments.
  • If the payments exceed what the UPDATER_ROLE is willing to pay to call trackMaltPrice, a user is able to sustain this attack.

This threatens the overall stability of the protocol and should be properly handled to prevent such attacks. However, the fact that MaltDataLab uses a series of spot price data points to calculate the MovingAverage also creates an area of concern as well-funded actors could still manipulate the MovingAverage contract by sandwiching calls to trackMaltPrice, trackPool and trackPoolReserves.

trackMaltPrice, trackPool, and trackPoolReserves should be added to the following areas of the code where applicable.

Consider adding calls to trackMaltPrice, trackPoolReserves and trackPool wherever the values are impacted by the protocol. This should ensure the protocol is tracking the most up-to-date values. Assuming the cumulative values are used in the MovingAverage contracts, then sensitive calls utilising MaltDataLab should be protected from flashloan attacks. However, currently this is not the case, rather MovingAverage consists of a series of spot price data points which can be manipulated by well-funded actors or via a flashloan. Therefore, there needs to be necessary changes made to MaltDataLab to use cumulative price updates as its moving average instead of spot price.

0xScotch (sponsor) confirmed:

Gas issues were the reason updates weren’t inlined into paths that update critical values. However based on some thoughts from the team over the past few weeks and suggestions in other audit findings I think we can reduce gas enough to make it viable to inline it

Alex the Entreprenerd (judge) commented:

  1. Miners can censor transactions, that is a fact
  2. Relying on an external call can cause race conditions or situations where the call didn’t happen (price didn’t update in time)
  3. Arguably a malicious actor could collude with miners with the goal of extracting further value

However, the target chain for the deployment is Polygon, so unless they were to create custom validator code, and collude 1-1 with each validator (no flashbots on Polygon, yet) then the attack is increasingly more complex.

The attack is reliant on the externalities of the validator + somebody incentivized enough to exploit this.

I agree with he finding and believe after stabilize the system should auto-update the prices Because of the external requirements am downgrading to medium severity

Low Risk Findings (43)

Non-Critical Findings (25)

Gas Optimizations (75)


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C4 Contests incentivize the discovery of exploits, vulnerabilities, and bugs in smart contracts. Security researchers are rewarded at an increasing rate for finding higher-risk issues. Contest submissions are judged by a knowledgeable security researcher and solidity developer and disclosed to sponsoring developers. C4 does not conduct formal verification regarding the provided code but instead provides final verification.

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