← Back to Audits

Demos Contract V1 PR16 - LucidLabs

Prepared by:

Halborn Logo

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

1

Critical

0

High

0

Medium

0

Low

0

Informational

1

Table of Contents

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 (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

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 (mIm_I)METRIC VALUENUMERICAL VALUE
Confidentiality (C)None (I:N)
Low (I:L)
Medium (I:M)
High (I:H)
Critical (I: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}

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 (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

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

0

High

0

Medium

0

Low

0

Informational

1

Security analysisRisk levelRemediation Date
Inadequate role separation for pause and unpause functionsInformationalAcknowledged - 07/09/2025

8. Findings & Tech Details

8.1 Inadequate role separation for pause and unpause functions

//

Informational

Description

The LTokenUpgradeable contract implements a flawed role-based access control system for the pause and unpause functionality. Both the pause() and unpause() functions in the contract are protected by the same PAUSE_ROLE, which creates a significant security vulnerability in the access control design.


During contract initialization, the same address (_owner) is assigned both the DEFAULT_ADMIN_ROLE and PAUSE_ROLE roles. This design allows any account with the PAUSE_ROLE to both pause and unpause the contract, eliminating the security benefits of having separate controls for these critical operations.


The pause functionality is particularly critical for this contract as it affects all token transfer operations through the _beforeTokenTransfer hook, which reverts all transfers when the contract is paused. This means that any account with the PAUSE_ROLE can effectively freeze all token transfers and then immediately resume them, creating a potential attack vector for malicious actors who gain access to this role.

BVSS
Recommendation

The contract should implement separate roles for pause and unpause operations to enhance security and reduce the attack surface. A recommended approach would be to create distinct roles such as PAUSE_ROLE and UNPAUSE_ROLE, where the pause role could be granted to emergency responders or security teams, while the unpause role should be restricted to a smaller set of trusted administrators.

Remediation Comment

ACKNOWLEDGED: The LucidLabs team acknowledged this finding.

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.

// Download the full report

Demos Contract V1 PR16

* Use Google Chrome for best results

** Check "Background Graphics" in the print settings if needed

© Halborn 2025. All rights reserved.