Zokyo Auditing Tutorials
  • 🔐Zokyo Auditing Tutorials
  • 📚Tutorials
    • 🏃Tutorial 1: Front-Running
      • 🚀Prerequisites
      • 📘Understanding Front-Running
      • 👓Examples
      • ⚒️Mitigation Steps
      • 🏦Resource Bank to more front running examples
      • 🤝Front-Running Conclusion
    • 🧱Tutorial 2: Unsafe Casting
      • 🚀Prerequisites
      • 📘Understanding Casting
      • 👓Examples
      • 🤝Unsafe Casting Conclusion
    • 👍Tutorial 3: Approvals and Safe Approvals
      • 🚀Prerequisites
      • 📘Understanding Approvals
      • 👓Vulnerability Examples
        • 🔁ERC20 Approval Reset Requirement
        • 😴Ignoring Return Values from ERC20 approve() Function: Potential Miscount of Successful Approvals
        • 🚫Improper use of Open Zeppelins safeApprove() for Non-zero Allowance Increments
        • 🥾Omitted Approval for Contract Interactions Within a Protocol
        • 🤦‍♂️Failing to Reset Token Approvals in Case of Failed Transactions or other actions
        • 💭Miscellaneous
        • ERC20 Approve Race Condition Vulnerability
      • ⚒️Spot the Vulnerability
      • 🤝Approvals and Safe Approvals Conclusion
    • ⛓️Tutorial 4: Block.chainid, DOMAIN_SEPARATOR and EIP-2612 permit
      • 🚀Prerequisites
      • 📘Understanding Block.chainid and DOMAIN_SEPARATOR
      • 👓Examples
      • ⚒️General Mitigation Steps
      • 🤝Tutorial 4 Conclusion
  • 💰Tutorial 5: Fee-On-Transfer Tokens
    • 🚀Prerequisites
    • 📘Understanding Fee-On-Transfer
    • 👓Examples
    • 📘Links to more fee-on-transfer vulnerability examples
    • 🤝Fee-On-Transfer Tokens: Conclusion
  • 🌴Tutorial 6: Merkle Trees
    • 🚀Prerequisites
    • 📘Understanding Merkle Trees
    • 🔎Verification within a Merkle Tree:
    • 📜Merkle Proofs Within Smart Contracts
    • 🖋️Merkle Proof Solidity Implementation
    • 🛑Vulnerabilities When Using Merkle Trees
    • 💀Example Vulnerabilities
    • 🧠Exercise
    • 🤝Merkle Trees Conclusion
  • 🌳Tutorial 7: Merkle-Patricia Trees
    • 🚀Prerequisites
    • 📘Understanding Merkle-Patricia Trees
    • 📕Understanding Merkle-Patrica Trees pt.2
    • 🔎Verification within a Merkle-Patricia Tree
    • 🛑Vulnerabilities When Using Merkle-Patricia Trees
    • 💀Example Vulnerability
    • 🤝Merkle-Patricia Trees: Conclusion
  • 🔁Tutorial 8: Reentrancy
    • 🚀Prerequisites
    • 📘Understanding Reentrancy
    • ⚒️Mitigation
    • 💀The DAO Hack: An In-depth Examination
    • 👓Examples
    • 🏦Resource Bank To More Reentrancy Examples
    • 🤝Conclusion: Reflecting on the Reentrancy Vulnerability
  • 🔂Tutorial 9: Read-Only Reentrancy
    • 🚀Prerequisites
    • 📘Understanding Read-Only Reentrancy
    • 🔨Mitigating Read-Only Reentrancy
    • 👓Real World Examples
    • 🏦Resource Bank To More Reentrancy Examples
    • 🤝Read-Only Reentrancy: Conclusion
  • 🚆Tutorial 10: ERC20 transfer() and safeTransfer()
    • 🚀Prerequisites
    • 📘Understanding ERC20 transfer() and safeTransfer()
    • 👓Examples
    • 🤝Conclusion
  • 📞Tutorial 11: Low level .call(), .transfer() and .send()
    • 🚀Prerequisites
    • 📘Understanding .call, .transfer, and .send
    • 🛑Understanding the Vulnerabilities of .transfer and .send
    • 👓Examples
    • 🤝Low level .call(), .transfer() and .send() conclusion
  • ☎️Tutorial 12: Delegatecall Vulnerabilities in Precompiled Contracts
    • 🚀Prerequisites
    • 📳Understanding Delegatecall
    • ⛰️EVM, L2s, Bridges, and the Quest for Scalability
    • 🏗️Understanding Precompiles in the Ethereum Virtual Machine (EVM)
    • 💻Custom Precompiles
    • 💀Potential Vulnerabilities in EVM Implementations: Overlooked DelegateCall in Precompiled Contracts
    • 👓Real World Examples
    • 🤝Delegatecall and Precompiles: Conclusion
  • 🌊Tutorial 13: Liquid Staking
    • 🚀Prerequisites
    • 📘Understanding Liquid Staking
    • 💀Understanding Liquid Staking Vulnerabilities
    • 🛑Example Vulnerability
    • 🐜Example Vulnerability 2
    • 🕷️Example Vulnerability 3
    • 🤝Liquid Staking: Conclusion
  • 🚿Tutorial 14: Slippage
    • 🚀Prerequisites
    • 📘Understanding Slippage in Automated Market Makers (AMMs)
    • 💀Understanding the "Lack of Slippage Check" Vulnerability in Automated Market Makers (AMMs) and DEXs
    • 😡On-Chain Slippage Calculations Vulnerability
    • 📛0 slippage tolerance vulnerability
    • 👓Real World Examples
    • 🏦Resource bank to more slippage vulnerabilities
    • 🤝Slippage Conclusion
  • 📉Tutorial 15: Oracles
    • 🚀Prerequisites
    • 📘Understanding Oracles
    • 📈Types of price feeds
    • 😡Flash Loans
    • 💀Understanding Oracle Vulnerabilities
      • ⛓️The Danger of Single Oracle Dependence
      • ⬇️Using Deprecated Functions
      • ❌Lack of return data validation
      • 🕐Inconsistent or Absent Price Data Fetching/Updating Intervals
    • 🔫Decentralized Exchange (DEX) Price Oracles Vulnerabilities
    • 🛑Found Vulnerabilities In Oracle Implementations
      • ⚖️Newly Registered Assets Skew Consultation Results
      • ⚡Flash-Loan Oracle Manipulations
      • ⛓️Relying Only On Chainlink: PriceOracle Does Not Filter Price Feed Outliers
      • ✍️Not Validating Return Data e.g Chainlink: (lastestRoundData)
      • 🗯️Chainlink: Using latestAnswer instead of latestRoundData
      • 😭Reliance On Fetching Oracle Functionality
      • 🎱Wrong Assumption of 18 decimals
      • 🧀Stale Prices
      • 0️⃣Oracle Price Returning 0
      • 🛶TWAP Oracles
      • 😖Wrong Token Order In Return Value
      • 🏗️miscellaneous
    • 🤝Oracles: Conclusion
  • 🧠Tutorial 16: Zero Knowledge (ZK)
    • 🚀Prerequisites
    • 📚Theory
      • 🔌Circom
      • 💻Computation
      • 🛤️Arithmetic Circuits
      • 🚧Rank-1 Constraint System (R1CS)
      • ➗Quadratic Arithmetic Program
      • ✏️Linear Interactive Proof
      • ✨ZK-Snarks
    • 🤓Definitions and Essentials
      • 🔑Key
      • 😎Scalar Field Order
      • 🌳Incremental Merkle Tree
      • ✒️ECDSA signature
      • 📨Non-Interactive Proofs
      • 🏝️Fiat-Shamir transformation (or Fiat-Shamir heuristic)
      • 🪶Pedersen commitment
    • 💀Common Vulnerabilities in ZK Code
      • ⛓️Under-constrained Circuits
      • ❗Nondeterministic Circuits
      • 🌊Arithmetic Over/Under Flows
      • 🍂Mismatching Bit Lengths
      • 🌪️Unused Public Inputs Optimized Out
      • 🥶Frozen Heart: Forging of Zero Knowledge Proofs
      • 🚰Trusted Setup Leak
      • ⛔Assigned but not Constrained
    • 🐛Bugs In The Wild
      • 🌳Dark Forest v0.3: Missing Bit Length Check
      • 🔢BigInt: Missing Bit Length Check
      • 🚓Circom-Pairing: Missing Output Check Constraint
      • 🏹Semaphore: Missing Smart Contract Range Check
      • 🔫Zk-Kit: Missing Smart Contract Range Check
      • 🤖Aztec 2.0: Missing Bit Length Check / Nondeterministic Nullifier
      • ⏸️Aztec Plonk Verifier: 0 Bug
      • 🪂0xPARC StealthDrop: Nondeterministic Nullifier
      • 😨a16z ZkDrops: Missing Nullifier Range Check
      • 🤫MACI 1.0: Under-constrained Circuit
      • ❄️Bulletproofs Paper: Frozen Heart
      • 🏔️PlonK: Frozen Heart
      • 💤Zcash: Trusted Setup Leak
      • 🚨14. MiMC Hash: Assigned but not Constrained
      • 🚔PSE & Scroll zkEVM: Missing Overflow Constraint
      • ➡️PSE & Scroll zkEVM: Missing Constraint
      • 🤨Dusk Network: Missing Blinding Factors
      • 🌃EY Nightfall: Missing Nullifier Range Check
      • 🎆Summa: Unconstrained Constants Assignemnt
      • 📌Polygon zkEVM: Missing Remainder Constraint
    • 💿ZK Security Resources
  • 🤝Tutorial 17 DEX's (Decentralized Exchanges)
    • 🚀Prerequisites
    • 📚Understanding Decentralized Exchanges
    • 💀Common Vulnerabilities in DEX Code
      • 🔎The "Lack of Slippage Check" Vulnerability in Automated Market Makers (AMMs) a
      • 😡On-Chain Slippage Calculations Vulnerability
      • 📛Slippage tolerance vulnerability
      • 😵How Pool Implementation Mismatches Pose a Security Risk to Decentralized Exchanges (DEXs)
      • 🏊‍♂️Vulnerabilities in Initial Pool Creation - Liquidity Manipulation Attacks
      • 🛑Vulnerabilities In Oracle Implementations
        • ⚖️Newly Registered Assets Skew Consultation Results
        • ⚡Flash-Loan Oracle Manipulations
        • ⛓️Relying Only On Chainlink: PriceOracle Does Not Filter Price Feed Outliers
        • ✍️Not Validating Return Data e.g Chainlink: (lastestRoundData)
        • 🗯️Chainlink: Using latestAnswer instead of latestRoundData
        • 😭Reliance On Fetching Oracle Functionality
        • 🎱Wrong Assumption of 18 decimals
        • 🧀Stale Prices
        • 0️⃣Oracle Price Returning 0
        • 🛶TWAP Oracles
        • 😖Wrong Token Order In Return Value
        • 🏗️miscellaneous
      • 🥶Minting and Burning Liquidity Pool Tokens
      • 🎫Missing Checks
      • 🔞18 Decimal Assumption
        • 📌Understanding ERC20 Decimals
        • 💀Examples Of Vulnerabilities To Do With Assuming 18 Decimals
      • 🛣️Incorrect Swap Path
      • The Importance of Deadline Checks in Swaps
    • 🤝Conclusion
  • 🤖Tutorial 18: Proxies
    • 🚀Prerequisites
    • 📥Ethereum Storage and Memory
    • 📲Ethereum Calls and Delegate Calls
    • 💪Upgradability Patterns in Ethereum: Enhancing Smart Contracts Over Time
    • 🔝Proxy Upgrade Pattern in Ethereum
    • 🌀Exploring the Landscape of Ethereum Proxies
      • 🪞Transparent Proxies
      • ⬆️UUPS Proxies
      • 💡Beacon Proxies
      • 💎Diamond Proxies
  • 🔞Tutorial 19: 18 Decimal Assumption
    • 🚀Prerequisites
    • 📌Understanding ERC20 Decimals
    • 💀Examples Of Vulnerabilities To Do With Assuming 18 Decimals
    • 🤝Conclusion
  • ➗Tutorial 20: Arithmetic
    • 🚀Prerequisites
    • 🕳️Arithmetic pitfall 1: Division by 0
    • 🔪Arithmetic pitfall 2: Precision Loss Due To Rounding
    • 🥸Arithmetic pitfall 3: Erroneous Calculations
    • 🤝Conclusion
  • 🔁Tutorial 21: Unbounded Loops
    • 🚀Prerequisites
    • ⛽Gas Limit Vulnerability
    • 📨Transaction Failures Within Loops
    • 🤝Conclusion
  • 📔Tutorial 22: `isContract`
    • 🚀Prerequisites
    • 💀Understanding the 'isContract()` vulnerability
    • 🤝Conclusion
  • 💵Tutorial 23: Staking
    • 🚀Prerequisites
    • 💀First Depositor Inflation Attack in Staking Contracts
    • 🌪️Front-Running Rebase Attack (Stepwise Jump in Rewards)
    • ♨️Rugability of a Poorly Implemented recoverERC20 Function in Staking Contracts
    • 😠General Considerations for ERC777 Reentrancy Vulnerabilities
    • 🥏Vulnerability: _lpToken and Reward Token Confusion in Staking Contracts
    • 🌊Slippage Checks
    • 🌽The Harvest Functionality in Vaults: Issues and Best Practices
  • ⛓️Tutorial 24: Chain Re-org Vulnerability
    • 🚀Prerequisites
    • ♻️Chain Reorganization (Re-org) Vulnerability
    • 🧑‍⚖️Chain Re-org Vulnerability in Governance Voting Mechanisms
  • 🌉Tutorial 25: Cross Chain Bridges Vulnerabilities
    • 🚀Prerequisites
    • ♻️ERC777 Bridge Vulnerability: Reentrancy Attack in Token Accounting
      • 🛑Vulnerability: Withdrawals Can Be Locked Forever If Recipient Is a Contract
    • 👛The Dangers of Not Using SafeERC20 for Token Transfers
    • Uninitialized Variable Vulnerability in Upgradeable Smart Contracts
    • Unsafe External Calls and Their Vulnerabilities
    • Signature Replay Attacks in Cross-Chain Protocols
  • 🚰Tutorial 26: Integer Underflow and Overflow Vulnerabilities in Solidity (Before 0.8.0)
    • 🚀Prerequisites
    • 💀Understanding Integer Underflow and Overflow Vulnerabilities
    • 🤝Conclusion
  • 🥏Tutorial 27: OpenZeppelin Vulnerabilities
    • 🚀Prerequisites
    • 🛣️A Guide on Vulnerability Awareness and Management
      • 🤝Conclusion
  • 🖊️Tutorial 28: Signature Vulnerabilities / Replays
    • 🚀Prerequisites
    • 🔏Reusing EIP-712 Signatures in Private Sales
    • 🔁Replay Attacks on Failed Transactions
    • 📃Improper Token Validation in Permit Signature
  • 🤝Tutorial 29: Solmate Vulnerabilities
    • 🔏Lack of Code Size Check in Token Transfer Functions in Solmate
  • 🧱Tutorial 30: Inconsistent block lengths across chains
    • 🕛Incorrect Assumptions about Block Number in Multi-Chain Deployments
  • 💉Tutorial 31: NFT JSON and XSS injection
    • 📜Vulnerability: JSON Injection in tokenURI Functions
    • 📍Cross-Site Scripting (XSS) Vulnerability via SVG Construction in Smart Contracts
  • 🍃Tutorial 32: Merkle Leafs
    • 🖥️Misuse of Merkle Leaf Nodes
  • 0️Tutorial 33: Layer 0
    • 📩Lack of Force Resume in LayerZero Integrations
    • ⛽LayerZero-Specific Vulnerabilities in Airdropped Gas and Failure Handling
    • 🔓Understanding the Vulnerability of Blocking LayerZero Channels
    • 🖊️Copy of Understanding the Vulnerability of Blocking LayerZero Channels
  • ♻️Tutorial 34: Forgetting to Update the Global State in Smart Contracts
  • ‼️Tutorial 35: Wrong Function Signature
  • 🛑Tutorial 36: Handling Edge Cases of Banned Addresses in DeFi
  • Tutorial 37: initializer and onlyInitializing
  • ➗Tutorial 38: Eigen Layer
    • 📩Denial of Service in NodeDelegator Due to EigenLayer's maxPerDeposit Check
    • 📈Incorrect Share Issuance Due to Strategy Updates in EigenLayer Integrations
    • 🔁nonReentrant Vulnerability in EigenLayer Withdrawals
  • ⚫Tutorial 39: Wormhole
    • 📩Proposal Execution Failure Due to Guardian Set Change
  • 💼Tutorial 40: Uniswap V3
    • 📩Understanding and Mitigating Partial Swaps in Uniswap V3
    • 🌊Underflow Vulnerability in Uniswap V3 Position Fee Growth Calculations
    • ➗Handling Decimal Discrepancies in Uniswap V3 Price Calculations
  • 🔢Tutorial 41: Multiple Token Addresses in Proxied Tokens
    • 🔓Understanding Vulnerabilities Arising from Tokens with Multiple Entry Points
  • 🤖Tutorial 42: abiDecoder v2
    • 🥥Vulnerabilities from Manipulated Token Interactions Using ABI Decoding
  • ❓Tutorial 43: On-Chain Randomness
    • Vulnerabilities in On-Chain Randomness and How It Can Be Exploited
  • 😖Tutorial 44: Weird ERC20 Tokens
    • Weird Token List
  • 🔨Tutorial 45: Hardcoded stable coin values
  • ❤️Tutorial 46: The Risks of Chainlink Heartbeat Discrepancies in Smart Contracts
  • 👣Tutorial 47: The Risk of Forgetting a Withdrawal Mechanism in Smart Contracts
  • 💻Tutorial 48: Governance and Voting
    • Flash Loan Voting Exploit
    • Exploiting Self-Delegation
    • 💰Missing payable Keyword in Governance Execute Function
    • 👊Voting Multiple Times by Shifting Delegation
    • 🏑Missing Duplicate Veto Check
  • 📕Tutorial 49: Not Conforming To EIP standards
    • 💎Understanding EIP-2981: NFT Royalty Standard
    • 👍Improper Implementation of EIP-2612 Permit Standard
    • 🔁Vulnerabilities of Missing EIP-155 Replay Attack Protection
    • ➡️Vulnerabilities Due to Missing EIP-1967 in Proxy Contracts
    • 🔓Vulnerability of Design Preventing EIP-165 Extensibility
    • 🎟️The Dangers of Not Properly Implementing ERC-4626 in Yield Vaults
    • 🔁EIP-712 Implementation and Replay Attacks
  • ⏳Tutorial 50: Vesting
    • 🚔Vulnerability of Allowing Unauthorized Withdrawals in Vesting Contracts
    • 👊Vulnerability of Unbounded Timelock Loops in Vesting Contracts
    • ⬆️Vulnerability of Incorrect Linear Vesting Calculations
    • ⛳Missing hasStarted Modifier
    • 🔓Vulnerability in Bond Depositor's Vesting Period Reset
  • ⛽Tutorial 51: Ethereum's 63/64 Gas Rule
    • 🛢️Abusing Ethereum's 63/64 Gas Rule to Manipulate Contract Behavior
  • 📩Tutorial 52: NPM Dependency Confusion and Unclaimed Packages
    • 💎Exploiting Unclaimed NPM Packages and Scopes
  • 🎈Tutorial 53: Airdrops
    • 🛄Claiming on Behalf of Other Users
    • 🧲Repeated Airdrop Claims Vulnerability
    • 🍃Airdrop Vulnerability – Merkle Leaves and Parent Node Hash Collisions
  • 🎯Tutorial 54: Precision
    • 🎁Vulnerabilities Due to Insufficient Precision in Reward Calculations
    • Min-Shares: Fixed Minimum Share Values for Tokens with Low Decimal Precision
    • Vulnerability Due to Incorrect Rounding When the Numerator is Not a Multiple of the Denominator
    • Vulnerability from Small Deposits Being Rounded Down to Zero Shares in Smart Contracts
    • Precision Loss During Withdrawals from Vaults Can Block Token Transfers Due to Value < Amount
    • 18 Decimal Assumption Scaling: Loss of Precision in Asset Conversion Due to Incorrect Scaling
  • Tutorial 55: AssetIn == AssetOut, FromToken == ToToken
    • 🖼️Vulnerability: Missing fromToken != toToken Check
  • 🚿Tutorial 56: Vulnerabilities Related to LP Tokens Being the Same as Reward Tokens
    • 🖼️Vulnerabilities Caused by LP Tokens Being the Same as Reward Tokens
  • Tutorial 57: Unsanitized SWAP Paths and Arbitrary Contract Call Vulnerabilities
    • 📲Arbitrary Contract Calls from Unsanitized Paths
  • Tutorial 58: The Risk of Infinite Approvals and Arbitrary Contract Calls
    • 🪣Exploiting Infinite Approvals and Arbitrary Contract Calls
  • Tutorial 59: Low-Level Calls in Solidity Returning True for Non-Existent Contracts
    • Low-Level Calls Returning True for Non-Existent Contracts
  • 0️⃣Tutorial 60: The Impact of PUSH0 and the Shanghai Hardfork on Cross-Chain Deployments > 0.8.20
    • PUSH0 and Cross-Chain Compatibility Challenges
  • 🐍Tutorial 61: Vyper Vulnerable Versions
    • Vyper and the EVM
  • ⌨️Tutorial 62: Typos in Smart Contracts — The Silent Threat Leading to Interface Mismatch
    • Vyper and the EVM
  • ☁️Tutorial 63: Balance Check Using ==
    • The Vulnerability: == Balance Check
  • 💍Tutorial 64: Equal Royalties for Unequal NFTs
    • Understanding the Problem: Equal Royalties for Unequal NFTs
  • 🖼️Tutorial 65: ERC721 and NFTs
    • The Risk of Using transferFrom Instead of safeTransferFrom in ERC721 Projects
    • ❄️Why _safeMint Should Be Used Instead of _mint in ERC721 Projects
    • The Importance of Validating Token Types in Smart Contracts
    • 📬Implementing ERC721TokenReceiver to Handle ERC721 Safe Transfers
    • NFT Implementation Deviating from ERC721 Standard in Transfer Functions
    • NFT Approval Persistence after Transfer
    • 🎮Gameable NFT Launches through Pseudo-Randomness
    • 2️⃣Protecting Buyers from Losing Funds Due to Claimed NFT Rewards on Secondary Markets
    • ♻️Preventing Reentrancy When Using SafeERC721
    • 🖊️Preventing Re-use of EIP-712 Signatures in NFT Private Sales
  • 2️⃣Tutorial 66: Vulnerability Arising from NFTs Supporting Both ERC721 and ERC1155 Standards
  • 📷Tutorial 67: ERC1155 Vulnerabilities
    • ♻️Preventing Reentrancy in OpenZeppelin's SafeERC1155
    • 🛫Vulnerabilities in OpenZeppelin's ERC1155Supply Contract
    • Understanding Incorrect Token Owner Enumeration in ERC1155Enumerable
    • Avoiding Breaking ERC1155 Composability with Improper safeTransferFrom Implementation
    • 💍Ensuring Compatibility with EIP-2981 in ERC1155 Contracts
  • 🪟Informational Vulnerabilities
  • ⛽Gas Efficiency
  • 💻Automation Tools
  • 🔜Out Of Gas (Coming Soon)
  • 🔜DEX Aggregators (Coming Soon)
  • 🔜Bribes (Coming Soon)
  • 🔜Understanding Compiled Bytecode (coming soon)
  • 🔜Deployment Mistakes (coming soon)
  • 🔜Optimistic Roll-ups (coming soon)
  • 🔜Typos (coming soon)
  • 🔜Try-Catch (coming soon)
  • 🔜NFT Market-place (coming soon)
  • 🔜Upgrade-able Contracts (coming soon)
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  • [LOW] Unsafe use of transfer()/transferFrom() with IERC20
  • [LOW] Use safeTransfer/safeTransferFrom consistently instead of transfer/transferFrom
  • [HIGH] TokenHandler.safeTransferOut does not work on non-standard compliant tokens like USDT
  • [HIGH]TokenHandler.safeTransferIn does not work on non-standard compliant tokens like USDT
  1. Tutorial 10: ERC20 transfer() and safeTransfer()

Examples

PreviousUnderstanding ERC20 transfer() and safeTransfer()NextConclusion

Last updated 1 year ago

Understanding the Examples: In the "Examples" section, we delve into practical instances of vulnerabilities associated with ERC20 transfer functions and how they were mitigated using OpenZeppelin's SafeERC20 safe transfers. These examples are taken from real-world audit reports, bug bounty programs, and in-depth code analyses. By studying these real-life cases, you'll gain a deeper and more tangible understanding of the intricacies of token transfers and their potential vulnerabilities. This knowledge will enhance your skills in identifying potential issues, applying safe transfer techniques, and effectively auditing smart contract code.

[LOW] Unsafe use of transfer()/transferFrom() with IERC20

Axelar Code4rena Contest bug report with payout

ERC20 is a standard interface for tokens within smart contracts. This standard provides a set of functions which any token implementing ERC20 must adhere to. The functions include transfer(), transferFrom(), and others. In accordance with the ERC20 standard, the transfer() and transferFrom() functions are expected to return a boolean value indicating the success or failure of the operation.

However, some tokens do not strictly adhere to this standard, despite being generally accepted as ERC20 tokens. A notable example of such a token is Tether (USDT). The transfer() and transferFrom() functions in Tether's smart contract do not return a boolean value as expected per the ERC20 standard, instead, they return nothing.

This deviation from the standard can lead to unexpected issues. When such tokens are cast, or treated as, IERC20 tokens (which means the interacting code assumes the token complies fully with the ERC20 standard), problems arise due to the mismatch between the expected function signatures (which include the return type) and the actual implemented functions. Specifically, calls to the transfer() or transferFrom() functions would fail, and the whole transaction would be reverted, because the functions don't return anything, whereas the code expects a boolean value.

As a mitigation to this issue, developers can use the safeTransfer() and safeTransferFrom() functions provided by the OpenZeppelin library's SafeERC20 module. These functions are designed to interact with ERC20 tokens in a way that handles these deviations from the standard. They allow for successful interactions even with tokens that do not strictly follow the ERC20 standard, such as Tether, by not relying on the return value. This way, even if the transfer() or transferFrom() functions don't return a value, the safeTransfer() and safeTransferFrom() functions will still work as expected, preventing unexpected transaction reverts.

[LOW] Use safeTransfer/safeTransferFrom consistently instead of transfer/transferFrom

Another Code4rena bug report with payout

Quote: "It is good to add a require() statement that checks the return value of token transfers or to use something like OpenZeppelin’s safeTransfer/safeTransferFrom unless one is sure the given token reverts in case of a failure. Failure to do so will cause silent failures of transfers and affect token accounting in contract."

High Vulnerability findings

Typically, when a smart contract interacts with an ERC20 token, it often performs a transfer() or transferFrom() operation to move tokens. As mentioned earlier, these operations are expected to return a boolean indicating whether the operation was successful or not. If a token, like Tether (USDT), does not adhere strictly to the ERC20 standard and does not return any value from these operations, smart contracts expecting a return value will see these operations as failed. This will cause the entire transaction to revert.

Now, imagine a scenario where a smart contract is designed to accept any ERC20 token, perform certain operations (like staking, pooling, etc.), and then allow users to withdraw their tokens when they want to. If a user deposits a non-standard token like USDT into the contract and the contract later tries to transfer those tokens (using transfer() or transferFrom()), it would trigger a transaction revert due to the lack of a return value from the transfer operations.

The critical point here is that if the contract doesn't have a special mechanism in place to handle such non-standard tokens, the user's tokens become effectively trapped within the contract. The contract cannot perform any transfer operations with the tokens, and the user cannot withdraw their tokens, resulting in a loss. In a worst-case scenario, if the contract manages a large pool of such tokens, the financial implications could be significant.

That's why using functions like safeTransfer() or safeTransferFrom() from the OpenZeppelin SafeERC20 library is essential. They can handle tokens even if they don't strictly follow the ERC20 standard, reducing the risk of tokens becoming trapped within a contract.

Examples:

[HIGH] TokenHandler.safeTransferOut does not work on non-standard compliant tokens like USDT

Code4rea bug report with payout

In the given scenario, the TokenHandler.safeTransferOut function is designed with the intention of safely managing token transfers, even for non-standard ERC20 tokens that do not return a boolean value when the transfer() function is called.

However, the logic it employs is flawed. The function first makes a call to the standard IERC20.transfer method, and then it executes a checkReturnCode function designed to handle non-standard tokens. The issue lies in the sequence of these operations. The IERC20.transfer call is expected to return a boolean indicating the success or failure of the transfer operation. If it doesn't receive a boolean (which is the case with non-standard tokens like USDT), the EVM considers this as a failed operation and the transaction reverts immediately. As a result, the subsequent checkReturnCode function is never even executed.

In effect, the function's current design prevents it from fulfilling its intended role. When users attempt to deposit non-standard tokens, the function reverts, effectively making deposits for these tokens impossible. This issue is significant because these non-standard tokens, including USDT, are widely used as valid underlying assets for various cTokens such as cUSDT.

The recommended solution to this problem is to use the safeApprove function from OpenZeppelin's SafeERC20 library, as it is specifically designed to handle ERC20 tokens, whether standard-compliant or not. The safeApprove function includes mechanisms to check the return value from approval operations and can correctly handle tokens that don't return a value, ensuring that the transaction does not revert unexpectedly and the tokens can be successfully managed.

[HIGH]TokenHandler.safeTransferIn does not work on non-standard compliant tokens like USDT

Code4rea bug report with payout

Details: The TokenHandler.safeTransferIn function uses the standard IERC20 function for the transfer call and proceeds with a checkReturnCode function to handle non-standard compliant tokens that don't return a return value. However, this does not work as calling token.transferFrom(account, amount) already reverts if the token does not return a return value, as token's IERC20.transferFrom is defined to always return a boolean.

Impact: When using any non-standard compliant token like USDT, the function will revert. Withdrawals for these tokens are broken, which is bad as USDT is a valid underlying for the cUSDT cToken.

Recommended Mitigation Steps: We recommend using versions with the safeApprove function that handles the return value check as well as non-standard-compliant tokens.

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