⏲️Informational Vulnerability 4: Timelocks

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Introduction: In decentralized platforms, trust is paramount. As smart contracts are immutable once deployed, changes to the contract's parameters or logic can be irreversible. Given this, introducing any significant modifications without prior notice can be alarming to stakeholders. This is where timelocks come into play. Timelocks act as a buffer, providing users with a window to observe, understand, and react to the proposed changes. In this tutorial, we'll delve into the essence of timelocks, their benefits, and how to implement them.

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Concept: A timelock is a mechanism that delays the execution of a function or change for a predetermined period. It allows stakeholders to become aware of impending modifications and, if necessary, adapt their strategies or positions before the changes take effect.

For instance, imagine a protocol that alters its staking requirements. Implementing such a change without prior notice might catch users off-guard. However, with a timelock in place, users are afforded time to adjust their stakes according to the new requirements, thereby fostering trust and minimizing potential user grievances.

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Benefits of Timelocks for Critical Changes:

• Transparency: Offers stakeholders visibility into upcoming changes.

• Risk Reduction: Provides users ample time to adjust their strategies.

• Enhanced Trust: Reinforces user confidence in the protocol's intentions and operations.

• Legitimacy: Signals that the project prioritizes user interests and is genuine in its endeavors.

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Example:

Without a timelock:

solidityCopy codefunction setStakingRequirement(uint256 _newRequirement) external onlyOwner {
    stakingRequirement = _newRequirement;
}

With a timelock:

solidityCopy codeuint256 public stakingRequirementChangeTime;
uint256 public newStakingRequirement;
const uint256 TIMELOCK_DURATION = 48 hours;  // Two days timelock for demonstration

event StakingRequirementChangeProposed(uint256 oldRequirement, uint256 newRequirement, uint256 changeTime);

function proposeStakingRequirementChange(uint256 _newRequirement) external onlyOwner {
    newStakingRequirement = _newRequirement;
    stakingRequirementChangeTime = block.timestamp + TIMELOCK_DURATION;
    emit StakingRequirementChangeProposed(stakingRequirement, _newRequirement, stakingRequirementChangeTime);
}

function implementStakingRequirementChange() external {
    require(block.timestamp >= stakingRequirementChangeTime, "Timelock period not passed yet");
    stakingRequirement = newStakingRequirement;
}

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Recommendation:

1. Review your contracts to pinpoint functions or parameters susceptible to significant changes.

2. Integrate timelocks to these sections, offering a reasonable delay for stakeholders to react.

3. Couple these timelocks with event emissions, further enhancing transparency.

4. Test the new structure rigorously, ensuring the timelock functions as expected.

5. Always prioritize stakeholder trust and transparency in future contracts by consistently utilizing timelocks.

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Conclusion: Timelocks are more than just a delay mechanism in smart contracts. They embody the project's commitment to transparency, trust, and the well-being of its users. By integrating timelocks for pivotal changes, projects can bolster user confidence, ensuring a harmonious and prosperous decentralized ecosystem.