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Demos Contract V1 PR16 - LucidLabs

Prepared by:

HALBORN

Last Updated 07/30/2025

Date of Engagement: June 25th, 2025 - June 30th, 2025

Summary

100% of all REPORTED Findings have been addressed

All findings

Critical

High

Medium

Low

Informational

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

8.1 Inadequate role separation for pause and unpause functions

1. Summary

2. Introduction

LucidLabs engaged our security analysis team to conduct a comprehensive security assessment of their smart contract ecosystem. The primary objective was to thoroughly evaluate the security architecture of the smart contracts to identify vulnerabilities, assess existing security measures, and provide actionable recommendations to enhance both the security and operational effectiveness of their smart contract framework. Our assessment was strictly limited to the provided smart contracts, ensuring a focused and exhaustive analysis of their security features.

3. Assessment Summary

Our engagement with LucidLabs spanned a 2 day period, during which we assigned a full-time security engineer with extensive experience in blockchain security, advanced penetration testing skills, and deep knowledge of various blockchain protocols. The objectives of this assessment were to:

- Verify the correct functionality of the smart contract operations.

- Identify potential security vulnerabilities within the smart contracts.

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

4. Test Approach and Methodology

Our testing strategy combined manual and automated techniques to ensure a comprehensive evaluation. Manual testing was essential for detecting logical and implementation flaws, while automated testing provided broad code coverage and rapid identification of common vulnerabilities. The testing process included:

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

- Comprehensive manual code reviews and walkthroughs.

- Functional and connectivity analysis using tools such as Solgraph.

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

This executive summary highlights the key findings and recommendations from our security assessment of the LucidLabs smart contract ecosystem. By addressing the identified issues and implementing the recommended improvements, LucidLabs can significantly enhance the security, reliability, and trustworthiness of its smart contract platform.

5. 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.

5.1 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:

$E = \prod m_e$

5.2 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:

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

5.3 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

6. SCOPE

REPOSITORY

(a) Repository: lucid-contracts

(b) Assessed Commit ID: 6e3da37

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

7. Assessment Summary & Findings Overview

Critical

High

Medium

Low

Informational

Security analysis	Risk level	Remediation Date
Inadequate role separation for pause and unpause functions	Informational	Acknowledged - 07/09/2025

8. Findings & Tech Details

8.1 Inadequate role separation for pause and unpause functions

Informational

Description

BVSS

AO:S/AC:L/AX:L/R:N/S:U/C:L/A:N/I:L/D:N/Y:N (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. Summary
2. Introduction
3. Assessment summary
4. Test approach and methodology
5. Risk methodology
6. Scope
7. Assessment summary & findings overview
8. Findings & Tech Details

8.1 Inadequate role separation for pause and unpause functions

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Demos Contract V1 PR16

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Demos Contract V1 PR16 - LucidLabs

Prepared by:

HALBORN

Last Updated 07/30/2025

Date of Engagement: June 25th, 2025 - June 30th, 2025

Summary

100% of all REPORTED Findings have been addressed

All findings

Critical

High

Medium

Low

Informational

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

8.1 Inadequate role separation for pause and unpause functions

1. Summary

2. Introduction

3. Assessment Summary

- Verify the correct functionality of the smart contract operations.

- Identify potential security vulnerabilities within the smart contracts.

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

4. Test Approach and Methodology

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

- Comprehensive manual code reviews and walkthroughs.

- Functional and connectivity analysis using tools such as Solgraph.

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

5. RISK METHODOLOGY

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.

5.1 EXPLOITABILITY

Attack Origin (AO):

Captures whether the attack requires compromising a specific account.

Attack Cost (AC):

Attack Complexity (AX):

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:

$E = \prod m_e$

5.2 IMPACT

Confidentiality (C):

Integrity (I):

Availability (A):

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:

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

5.3 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

6. SCOPE

REPOSITORY

(a) Repository: lucid-contracts

(b) Assessed Commit ID: 6e3da37

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

7. Assessment Summary & Findings Overview

Critical

High

Medium

Low

Informational

Security analysis	Risk level	Remediation Date
Inadequate role separation for pause and unpause functions	Informational	Acknowledged - 07/09/2025

8. Findings & Tech Details

8.1 Inadequate role separation for pause and unpause functions

Informational

Description

BVSS

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

Recommendation

Remediation Comment

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