Prepared by:
HALBORN
Last Updated 10/14/2025
Date of Engagement: September 11th, 2025 - September 16th, 2025
100% of all REPORTED Findings have been addressed
All findings
16
Critical
0
High
0
Medium
4
Low
6
Informational
6
Better Bank engaged Halborn to conduct a security assessment on their smart contracts beginning on September 12th, 2025 and ending on September 19th, 2025. The scope of this assessment was limited to the smart contracts provided to the Halborn team. Commit hashes and additional details are documented in the Scope section of this report.
Better Bank protocol creates and manages an onchain dual-token economy centered on Favor token and Esteem token. Through contracts like PulseMinter, users can mint Esteem with supported assets or redeem it for Favor, while the Treasury governs supply expansion using price oracles and epoch-based seigniorage. Staking (Grove) distributes Favor rewards to Esteem stakers via a snapshot-based mechanism, and a Zapper simplifies user flows by batching multi-step mint, stake, and claim actions. The architecture combines minting, treasury control, staking rewards, and UX tooling into a cohesive incentive loop for sustainable token distribution and protocol growth.
Halborn assigned a full-time security engineer to review the security of the smart contracts in scope. The engineer is a blockchain and smart contract security expert with advanced penetration testing and smart contract hacking skills, and deep knowledge of multiple blockchain protocols.
The purpose of the assessment is to:
Identify potential security issues within the smart contracts.
Ensure that smart contract functionality operates as intended.
In summary, Halborn identified several areas for improvement to reduce both the likelihood and impact of potential risks, which were mostly addressed by the Better Bank team. The main recommendations were:
Ensure proper epoch checks in seigniorage allocation to prevent minting against stale epochs.
Improve oracle price cap handling to prevent frozen or stale low-price exploitation.
Enforce a minimum stake lock period until the end of the next epoch to prevent last-minute staking solely to capture current rewards.
Scale and normalize the LP token price.
Halborn performed a combination of manual code review and automated security testing to balance efficiency, timeliness, practicality, and accuracy in regard to the scope of this assessment. While manual testing is essential to uncover flaws in logic, process, and implementation, automated testing techniques enhance coverage of smart contracts and can quickly identify issues that do not follow security best practices.
The following phases and associated tools were used throughout the assessment:
Research into the architecture, purpose, and use of the platform.
Manual code review and walkthrough of the smart contracts to identify potential logic issues.
Manual testing of all core functions, including deposit, withdraw, repay, and borrow, to validate expected behavior and identify edge-case vulnerabilities.
Local testing to simulate contract interactions and validate functional and security assumptions.
Local deployment and testing with Foundry.
| 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
4
Low
6
Informational
6
| Security analysis | Risk level | Remediation Date |
|---|---|---|
| Epoch desynchronization causes seigniorage to be minted with stale data | Medium | Solved - 09/19/2025 |
| Price cap mechanism can freeze oracle values and enable arbitrage | Medium | Solved - 09/22/2025 |
| Reward allocation timing enables strategic staking advantage | Medium | Solved - 09/20/2025 |
| LP token price returned as a constant value instead of scaling with input | Medium | Solved - 09/27/2025 |
| Missed epoch updates can leave Esteem rate stale and undervalued | Low | Solved - 09/27/2025 |
| Absence of slippage checks and strict deadlines exposes operations to front-running | Low | Solved - 09/22/2025 |
| Ownership transfers rely on single-step pattern without acceptance | Low | Solved - 09/22/2025 |
| Tax bypass via intermediate tax-exempt address | Low | Solved - 09/27/2025 |
| Pause mechanism does not cover reward claiming | Low | Solved - 09/27/2025 |
| Epoch counters are initialized inconsistently across contracts | Low | Solved - 09/27/2025 |
| Array-based removal of excluded addresses may fail with large input size | Informational | Solved - 09/27/2025 |
| Duplicate Favor registrations can overwrite existing mappings | Informational | Solved - 09/21/2025 |
| Constructor-assigned variables not marked as immutable | Informational | Solved - 09/27/2025 |
| Missing zero-address validation in function parameters | Informational | Solved - 09/27/2025 |
| ETH refund process lacks reentrancy protection | Informational | Solved - 09/21/2025 |
| Potential LP yield extraction through share price reset if flash loans are enabled | Informational | Acknowledged - 09/22/2025 |
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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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