Smart Contract Assessment - APYX

1. INTRODUCTION

Apyx engaged Halborn to perform a security assessment of their smart contracts from June 10th, 2026 to June 15th, 2026. The assessment scope was limited to the smart contracts provided to Halborn. Commit hashes and additional details are available in the Scope section of this report.

The Apyx codebase in scope consists of an ERC-4626 staking vault that issues yield-bearing shares for deposited apxUSD and, on withdrawal, escrows the underlying into a soulbound, fee-charging ERC-721 unlock receipt that holders later claim for a time-decaying exit fee, with both contracts adding pause, deny-list/compliance, and UUPS-upgradeable controls.

2. ASSESSMENT SUMMARY

Halborn was allocated 4 days for this engagement and assigned 1 full-time security engineer to conduct a comprehensive review of the smart contracts within scope. The engineer is an expert in blockchain and smart contract security, with advanced skills in penetration testing and smart contract exploitation, as well as extensive knowledge of multiple blockchain protocols.

The objectives of this assessment are to:

• Identify potential security vulnerabilities within the smart contracts.

• Verify that the smart contract functionality operates as intended.

In summary, Halborn identified several areas for improvement to reduce the likelihood and impact of security risks, which were partially addressed by the Apyx team. The main recommendations were:

• Enforce the deny-list at the receipt claim path, reverting when either the caller (receipt owner) or the chosen receiver is deny-listed, so that a sanctioned owner cannot extract escrowed funds by naming a clean receiver.

• Add proper validation to ensure that input values are within expected ranges and that contract references implement the expected interface and are correctly wired before assignment. Specifically, in setUnlockReceipt() verify the new receipt's registered vault() matches address(this) and its asset() matches the vault's underlying asset, and in setVesting() confirm the new vesting contract exposes the expected interface and operates on the correct asset.

• Make ApyUSD.totalAssets() exclude vested yield while totalSupply is zero, so that orphaned yield is not counted when there are no shares to back.

3. TEST APPROACH AND METHODOLODY

Halborn conducted a combination of manual code review and automated security testing to balance efficiency, timeliness, practicality, and accuracy within the scope of this assessment. While manual testing is crucial for identifying flaws in logic, processes, and implementation, automated testing enhances coverage of smart contracts and quickly detects deviations from established security best practices.

The following phases and associated tools were employed throughout the term of the assessment:

• Research into the platform's architecture, purpose and use.

• Manual code review and walkthrough of smart contracts to identify any logical issues.

• Comprehensive assessment of the safety and usage of critical Solidity variables and functions within scope that could lead to arithmetic-related vulnerabilities.

• Local testing using custom scripts (Foundry).

• Fork testing against main networks (Foundry).

• Static security analysis of scoped contracts, and imported functions (Slither).