Subaccount & Yield - BSX Exchange

1. INTRODUCTION

BSX engaged Halborn to conduct a security assessment on their smart contracts beginning on April 7th, 2025 and ending on April 16th, 2025. The security assessment was scoped to smart contracts in the GitHub repository provided to the Halborn team. Commit hashes and further details can be found in the Scope section of this report.

2. ASSESSMENT SUMMARY

The team at Halborn assigned a full-time security engineer to assess the security of the smart contracts. The security engineer is a blockchain and smart-contract security expert with advanced penetration testing, smart-contract hacking, and deep knowledge of multiple blockchain protocols.

The purpose of this assessment is to:

• Ensure that smart contract functions operate as intended.

• Identify potential security issues with the smart contracts.

In summary, Halborn identified some improvements to reduce the likelihood and impact of risks, which were mostly addressed by the BSX team. The main ones were the following:

• Restrict the transfer of vault share tokens to prevent inconsistencies in the average price tracking.

• Prevent the transfer of vault share tokens from subaccounts to main accounts during subaccount deletion.

• Restrict subaccounts from performing swaps that result in the acquisition of vault shares.

• Add an explicit check to ensure an account cannot be reassigned as a subaccount of itself.

• Only finalize each operation's authorization once the transfer or withdrawal succeeds, so that failures don't permanently lock out retries.

• Automatically close or liquidate all of the subaccount's open positions before deleting a subaccount.

• Include a per‑main‑account nonce to track consumed nonces, so that any old consent signature cannot be replayed after revocation.

• Record the token balance immediately before and after each ERC-4626 call, calculate the actual asset delta, and require that this observed change equals the returned output.

3. CAVEATS

This assessment only covers the changes introduced between commit d1cad2e and commit 2e8c754 (inclusive). All other parts of the codebase are treated as black boxes, and it is assumed that any required security mechanisms are properly implemented elsewhere in the system. This includes, but is not limited to, input validation, business logic enforcement, and access control.

Differential audits focus on identifying security risks introduced or modified in a specific set of changes. While some components added in the diff may interact with each other or with existing logic, these interactions are only reviewed when they are explicitly visible within the diff itself. Implicit assumptions or cross-component dependencies may fall outside the scope unless clearly surfaced through changes or supporting context. As an example, the feeAmount field in swapYieldAssetPermit was noted as unused during the review. The BSX team confirmed this is expected and that future logic will handle it.

For a more complete understanding of the protocol's security posture and the behavior of interconnected components, a full-scope assessment is recommended.

4. TEST APPROACH AND METHODOLOGY

Halborn performed a combination of manual review of the code and automated security testing to balance efficiency, timeliness, practicality, and accuracy in regard to the scope of the smart contract assessment. While manual testing is recommended to uncover flaws in logic, process, and implementation; automated testing techniques help enhance coverage of smart contracts and can quickly identify items that do not follow security best practices. The following phases and associated tools were used throughout the term of the assessment:

• Research into the architecture, purpose, and use of the platform.

• Smart contract manual code review and walkthrough to identify any logic issue.

• Thorough assessment of safety and usage of critical Solidity variables and functions in scope that could lead to arithmetic related vulnerabilities.

• Manual testing by custom scripts.

• Graphing out functionality and contract logic/connectivity/functions (solgraph).

• Static Analysis of security for scoped contract, and imported functions. (Slither).

• Local or public testnet deployment (Foundry, Remix IDE).