Prepared by:
HALBORN
Last Updated 04/20/2026
Date of Engagement: March 19th, 2026 - March 20th, 2026
100% of all REPORTED Findings have been addressed
All findings
11
Critical
0
High
0
Medium
2
Low
6
Informational
3
Arkonix engaged Halborn to perform a security assessment of their smart contracts starting on March 19th 2026 and ending on March 20th, 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 Arkonix codebase in scope consists of smart contracts built on top of the Centrifuge protocol that implement a fee management layer for on-chain investment pools, a Merkle proof-based strategy execution system allowing pre-approved on-chain calls via cryptographic policy trees, and an EIP-712 signature-based execution manager using KMS-derived signatures as an alternative authorization mechanism, together with their respective factory contracts for deterministic per-pool and per-share-class deployments.
Halborn was allocated 2 days for this engagement and assigned 1 full-time security engineers to conduct a comprehensive review of the smart contracts within scope. The engineers are experts 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 fully addressed by the Arkonix team. The main recommendations were:
Add access control to newManager() so only the trusted contractUpdater can deploy managers.
Add the same batch size guards that exist in ArkonixProofManager.execute().
Replace both rounding-down operations with rounding-up equivalents so that every fee calculation favours the protocol.
Auto-initialize the fee state on the first call to updateSharePrice() when _initialized is false.
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).
| EXPLOITABILITY METRIC () | METRIC VALUE | NUMERICAL VALUE |
|---|---|---|
| Attack Origin (AO) | Arbitrary (AO:A) Specific (AO:S) | 1 0.2 |
| Attack Cost (AC) | Low (AC:L) Medium (AC:M) High (AC:H) | 1 0.67 0.33 |
| Attack Complexity (AX) | Low (AX:L) Medium (AX:M) High (AX:H) | 1 0.67 0.33 |
| IMPACT METRIC () | METRIC VALUE | NUMERICAL VALUE |
|---|---|---|
| Confidentiality (C) | None (C:N) Low (C:L) Medium (C:M) High (C:H) Critical (C:C) | 0 0.25 0.5 0.75 1 |
| Integrity (I) | None (I:N) Low (I:L) Medium (I:M) High (I:H) Critical (I:C) | 0 0.25 0.5 0.75 1 |
| Availability (A) | None (A:N) Low (A:L) Medium (A:M) High (A:H) Critical (A:C) | 0 0.25 0.5 0.75 1 |
| Deposit (D) | None (D:N) Low (D:L) Medium (D:M) High (D:H) Critical (D:C) | 0 0.25 0.5 0.75 1 |
| Yield (Y) | None (Y:N) Low (Y:L) Medium (Y:M) High (Y:H) Critical (Y:C) | 0 0.25 0.5 0.75 1 |
| SEVERITY COEFFICIENT () | COEFFICIENT VALUE | NUMERICAL VALUE |
|---|---|---|
| Reversibility () | None (R:N) Partial (R:P) Full (R:F) | 1 0.5 0.25 |
| Scope () | Changed (S:C) Unchanged (S:U) | 1.25 1 |
| Severity | Score Value Range |
|---|---|
| Critical | 9 - 10 |
| High | 7 - 8.9 |
| Medium | 4.5 - 6.9 |
| Low | 2 - 4.4 |
| Informational | 0 - 1.9 |
Critical
0
High
0
Medium
2
Low
6
Informational
3
| Security analysis | Risk level | Remediation Date |
|---|---|---|
| Unrestricted newManager() in ArkonixProofManagerFactory allows any EOA to frontrun deployment and gain control of the proof manager | Medium | Solved - 03/25/2026 |
| ArkonixFeeManager.setFeeConfig() does not settle pending accruals before applying a new fee rate | Medium | Solved - 03/25/2026 |
| Missing batch size validation in ArkonixMerkleProofManager.execute() allows unbounded call arrays | Low | Solved - 03/25/2026 |
| Fee calculation rounds down, systematically undercharging fees in favour of users over the protocol | Low | Solved - 03/25/2026 |
| Uninitialized pool state in ArkonixFeeManager.updateSharePrice() causes loss of management and performance fees | Low | Solved - 03/25/2026 |
| Missing zero price validation in ArkonixFeeManager.updateSharePrice() | Low | Solved - 03/25/2026 |
| Missing zero address validation in ArkonixMerkleProofManagerFactory constructor permanently bricks all deployed managers | Low | Solved - 03/25/2026 |
| ArkonixFeeManager mixes gross and net prices for high water mark storage, enabling performance fee double-charging when fee is toggled off and re-enabled | Low | Solved - 03/25/2026 |
| ArkonixMerkleProofManager.trustedCall() unconditionally writes and emits UpdatePolicy even when the new root is identical to the existing root | Informational | Solved - 03/25/2026 |
| Missing ETH rescue mechanism | Informational | Solved - 03/25/2026 |
| _toPolicyLeaf() is Dead Code | Informational | Solved - 04/13/2026 |
//Medium
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//Informational
//Informational
//Informational
Halborn strongly recommends conducting a follow-up assessment of the project either within six months or immediately following any material changes to the codebase, whichever comes first. This approach is crucial for maintaining the project’s integrity and addressing potential vulnerabilities introduced by code modifications.
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Arkonix Protocol
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