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Finance Contracts - Bonzo Finance

Prepared by:

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HALBORN

Last Updated Unknown date

Date of Engagement: June 24th, 2024 - July 5th, 2024

Summary

100% of all REPORTED Findings have been addressed

All findings

11

Critical

4

High

0

Medium

1

Low

1

Informational

5

Table of Contents

1. Introduction

Bonzo engaged our security analysis team to conduct a comprehensive security audit of their smart contract ecosystem. The primary aim was to meticulously assess the security architecture of the smart contracts to pinpoint vulnerabilities, evaluate existing security protocols, and offer actionable insights to bolster security and operational efficacy of their smart contract framework. Our assessment was strictly confined to the smart contracts provided, ensuring a focused and exhaustive analysis of their security features.

2. Assessment Summary

Our engagement with Bonzo spanned a 1.5-week period, during which we dedicated one full-time security engineer equipped with extensive experience in blockchain security, advanced penetration testing capabilities, and profound knowledge of various blockchain protocols. The objectives of this assessment were to:

- Verify the correct functionality of smart contract operations.

- Identify potential security vulnerabilities within the smart contracts.

- Provide recommendations to enhance the security and efficiency of the smart contracts.

3. Test Approach and Methodology

Our testing strategy employed a blend of manual and automated techniques to ensure a thorough evaluation. While manual testing was pivotal for uncovering logical and implementation flaws, automated testing offered broad code coverage and rapid identification of common vulnerabilities. The testing process included:

- A detailed examination of the smart contracts' architecture and intended functionality.

- Comprehensive manual code reviews and walkthroughs.

- Functional and connectivity analysis utilizing tools like Solgraph.

- Customized script-based manual testing and testnet deployment using Foundry.

This executive summary encapsulates the pivotal findings and recommendations from our security assessment of Bonzo's smart contract ecosystem. By addressing the identified issues and implementing the recommended fixes, Bonzo can significantly boost the security, reliability, and trustworthiness of its smart contract platform.

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 (mem_e)METRIC VALUENUMERICAL 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 EE is calculated using the following formula:

E=∏meE = \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 (mIm_I)METRIC VALUENUMERICAL 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 II is calculated using the following formula:

I=max(mI)+∑mI−max(mI)4I = 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 (CC)COEFFICIENT VALUENUMERICAL VALUE
Reversibility (rr)None (R:N)
Partial (R:P)
Full (R:F)		1
0.5
0.25
Scope (ss)Changed (S:C)
Unchanged (S:U)		1.25
1
Severity Coefficient CC is obtained by the following product:

C=rsC = rs

The Vulnerability Severity Score SS is obtained by:

S=min(10,EIC∗10)S = min(10, EIC * 10)

The score is rounded up to 1 decimal places.
SeverityScore Value Range
Critical9 - 10
High7 - 8.9
Medium4.5 - 6.9
Low2 - 4.4
Informational0 - 1.9

5. SCOPE

REPOSITORY
(a) Repository: bonzo-finance-contracts
(b) Assessed Commit ID: 3b3de0b
(c) Items in scope:
  • contracts/misc/WHBAR/HederaTokenService.sol
  • contracts/misc/WHBAR/Bits.sol
  • contracts/misc/WHBAR/SafeHederaTokenService.sol
↓ Expand ↓
Out-of-Scope: New features/implementations after the remediation commit IDs.

6. Assessment Summary & Findings Overview

Critical

4

High

0

Medium

1

Low

1

Informational

5

Security analysisRisk levelRemediation Date
Incorrect asset handling during withdrawCriticalSolved - 07/22/2024
Incorrect asset handling during executeBorrowCriticalSolved - 07/22/2024
Stable Rate Mode Critical BugCriticalSolved - 07/23/2024
Price Inflation in ATokenCriticalSolved - 07/22/2024
Unsafe Modification of Decimals in LendingPoolConfiguratorMediumSolved - 07/22/2024
Lack of Two-step Ownership Transfer and Unsafe renounceOwnershipLowSolved - 07/22/2024
Suboptimal Handling of WHBAR Variables and DeploymentInformationalAcknowledged
Duplicate HederaTokenService ContractsInformationalSolved - 07/22/2024
Inconsistent return handling in redirectForTokenInformationalSolved - 07/22/2024
Suboptimal Contract Design for getDecimalsInformationalSolved - 07/22/2024
Suboptimal Token Association and Transfer Mechanism in ATokenInformationalAcknowledged

7. Findings & Tech Details

7.1 Incorrect asset handling during withdraw

//

Critical

Description
BVSS
Recommendation
Remediation Comment

7.2 Incorrect asset handling during executeBorrow

//

Critical

Description
BVSS
Recommendation
Remediation Comment

7.3 Stable Rate Mode Critical Bug

//

Critical

Description
BVSS
Recommendation
Remediation Comment

7.4 Price Inflation in AToken

//

Critical

Description
BVSS
Recommendation
Remediation Comment

7.5 Unsafe Modification of Decimals in LendingPoolConfigurator

//

Medium

Description
BVSS
Recommendation
Remediation Comment

7.6 Lack of Two-step Ownership Transfer and Unsafe renounceOwnership

//

Low

Description
BVSS
Recommendation
Remediation Comment

7.7 Suboptimal Handling of WHBAR Variables and Deployment

//

Informational

Description
BVSS
Recommendation
Remediation Comment

7.8 Duplicate HederaTokenService Contracts

//

Informational

Description
BVSS
Recommendation
Remediation Comment

7.9 Inconsistent return handling in redirectForToken

//

Informational

Description
BVSS
Recommendation
Remediation Comment

7.10 Suboptimal Contract Design for getDecimals

//

Informational

Description
BVSS
Recommendation
Remediation Comment

7.11 Suboptimal Token Association and Transfer Mechanism in AToken

//

Informational

Description
BVSS
Recommendation
Remediation Comment

8. Automated Testing

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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Finance Contracts

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