BetterBank Custom Contracts - BetterBank

Prepared by:

HALBORN

Last Updated 10/14/2025

Date of Engagement: September 11th, 2025 - September 16th, 2025

Summary

100% of all REPORTED Findings have been addressed

All findings

Critical

High

Medium

Low

Informational

1. Introduction
2. Assessment summary
3. Test approach and methodology
4. Risk methodology
5. Scope
6. Assessment summary & findings overview
7. Findings & Tech Details

7.1 Epoch desynchronization causes seigniorage to be minted with stale data
7.2 Price cap mechanism can freeze oracle values and enable arbitrage
7.3 Reward allocation timing enables strategic staking advantage
7.4 Lp token price returned as a constant value instead of scaling with input
7.5 Missed epoch updates can leave esteem rate stale and undervalued
7.6 Absence of slippage checks and strict deadlines exposes operations to front-running
7.7 Ownership transfers rely on single-step pattern without acceptance
7.8 Tax bypass via intermediate tax-exempt address
7.9 Pause mechanism does not cover reward claiming
7.10 Epoch counters are initialized inconsistently across contracts
7.11 Array-based removal of excluded addresses may fail with large input size
7.12 Duplicate favor registrations can overwrite existing mappings
7.13 Constructor-assigned variables not marked as immutable
7.14 Missing zero-address validation in function parameters
7.15 Eth refund process lacks reentrancy protection
7.16 Potential lp yield extraction through share price reset if flash loans are enabled

1. Introduction

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.

2. Assessment Summary

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.

3. Test Approach and Methodology

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.

4. RISK METHODOLOGY

Every vulnerability and issue observed by Halborn is ranked based on two sets of Metrics and a Severity Coefficient. This system is inspired by the industry standard Common Vulnerability Scoring System.

The two Metric sets are: Exploitability and Impact. Exploitability captures the ease and technical means by which vulnerabilities can be exploited and Impact describes the consequences of a successful exploit.

The Severity Coefficients is designed to further refine the accuracy of the ranking with two factors: Reversibility and Scope. These capture the impact of the vulnerability on the environment as well as the number of users and smart contracts affected.

The final score is a value between 0-10 rounded up to 1 decimal place and 10 corresponding to the highest security risk. This provides an objective and accurate rating of the severity of security vulnerabilities in smart contracts.

The system is designed to assist in identifying and prioritizing vulnerabilities based on their level of risk to address the most critical issues in a timely manner.

4.1 EXPLOITABILITY

Attack Origin (AO):

Captures whether the attack requires compromising a specific account.

Attack Cost (AC):

Captures the cost of exploiting the vulnerability incurred by the attacker relative to sending a single transaction on the relevant blockchain. Includes but is not limited to financial and computational cost.

Attack Complexity (AX):

Describes the conditions beyond the attacker’s control that must exist in order to exploit the vulnerability. Includes but is not limited to macro situation, available third-party liquidity and regulatory challenges.

Metrics:

EXPLOITABILITY METRIC ( $m_e$ )	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

Exploitability

E

is calculated using the following formula:

$E = \prod m_e$

4.2 IMPACT

Confidentiality (C):

Measures the impact to the confidentiality of the information resources managed by the contract due to a successfully exploited vulnerability. Confidentiality refers to limiting access to authorized users only.

Integrity (I):

Measures the impact to integrity of a successfully exploited vulnerability. Integrity refers to the trustworthiness and veracity of data stored and/or processed on-chain. Integrity impact directly affecting Deposit or Yield records is excluded.

Availability (A):

Measures the impact to the availability of the impacted component resulting from a successfully exploited vulnerability. This metric refers to smart contract features and functionality, not state. Availability impact directly affecting Deposit or Yield is excluded.

Deposit (D):

Measures the impact to the deposits made to the contract by either users or owners.

Yield (Y):

Measures the impact to the yield generated by the contract for either users or owners.

Metrics:

IMPACT METRIC ( $m_I$ )	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

Impact

I

is calculated using the following formula:

$I = max(m_I) + \frac{\sum{m_I} - max(m_I)}{4}$

4.3 SEVERITY COEFFICIENT

Reversibility (R):

Describes the share of the exploited vulnerability effects that can be reversed. For upgradeable contracts, assume the contract private key is available.

Scope (S):

Captures whether a vulnerability in one vulnerable contract impacts resources in other contracts.

Metrics:

SEVERITY COEFFICIENT ( $C$ )	COEFFICIENT VALUE	NUMERICAL VALUE
Reversibility ( $r$ )	None (R:N) Partial (R:P) Full (R:F)	1 0.5 0.25
Scope ( $s$ )	Changed (S:C) Unchanged (S:U)	1.25 1

Severity Coefficient

C

is obtained by the following product:

$C = rs$

The Vulnerability Severity Score

S

is obtained by:

$S = min(10, EIC * 10)$

The score is rounded up to 1 decimal places.

Severity	Score Value Range
Critical	9 - 10
High	7 - 8.9
Medium	4.5 - 6.9
Low	2 - 4.4
Informational	0 - 1.9

5. SCOPE

REPOSITORY

(a) Repository: BB-Custom-contracts

(b) Assessed Commit ID: 43fba5e

contracts/usingFetch/usingFetch.sol
contracts/Epoch.sol
contracts/Esteem.sol

↓ Expand ↓

Out-of-Scope: Third party dependencies and economic attacks.

Remediation Commit ID:

Out-of-Scope: New features/implementations after the remediation commit IDs.

6. Assessment Summary & Findings Overview

Critical

High

Medium

Low

Informational

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

https://github.com/grape-finance/BB-Custom-contracts/commit/3984e54bb615592847dd8c33624db3619da55c25

7.16 Potential LP yield extraction through share price reset if flash loans are enabled

Informational

Description

BVSS

AO:A/AC:M/AX:H/R:N/S:U/C:N/A:N/I:N/D:N/Y:L (0.6)

Recommendation

Remediation Comment

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.

1. Introduction
2. Assessment summary
3. Test approach and methodology
4. Risk methodology
5. Scope
6. Assessment summary & findings overview
7. Findings & Tech Details

7.1 Epoch desynchronization causes seigniorage to be minted with stale data
7.2 Price cap mechanism can freeze oracle values and enable arbitrage
7.3 Reward allocation timing enables strategic staking advantage
7.4 Lp token price returned as a constant value instead of scaling with input
7.5 Missed epoch updates can leave esteem rate stale and undervalued
7.6 Absence of slippage checks and strict deadlines exposes operations to front-running
7.7 Ownership transfers rely on single-step pattern without acceptance
7.8 Tax bypass via intermediate tax-exempt address
7.9 Pause mechanism does not cover reward claiming
7.10 Epoch counters are initialized inconsistently across contracts
7.11 Array-based removal of excluded addresses may fail with large input size
7.12 Duplicate favor registrations can overwrite existing mappings
7.13 Constructor-assigned variables not marked as immutable
7.14 Missing zero-address validation in function parameters
7.15 Eth refund process lacks reentrancy protection
7.16 Potential lp yield extraction through share price reset if flash loans are enabled

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BetterBank Custom Contracts

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