Overview

The Pike team engaged Fuzzland to conduct a thorough security audit of their nuts-monorepo project. The primary objective was to identify and mitigate potential security vulnerabilities, risks, and coding issues to enhance the project's robustness and reliability. Fuzzland conducted this assessment over nine person-days, involving three engineers who reviewed the code over a span of 3 days. Employing a multifaceted approach that included static analysis, fuzz testing, formal verification, and manual code review, the Fuzzland team has identified six issues.

Scope

Disclaimer

The audit does not ensure that it has identified every security issue in the smart contracts, and it should not be seen as a confirmation that there are no more vulnerabilities. The audit is not exhaustive, and we recommend further independent audits and setting up a public bug bounty program for enhanced security verification of the smart contracts. Additionally, this report should not be interpreted as personal financial advice or recommendations.

Auditing Process

• Static Analysis: We perform static analysis using our internal tools to identify potential vulnerabilities and coding issues.
• Manual Code Review: Our engineers manually review code to identify potential vulnerabilities not captured by previous methods.

Vulnerability Severity

We divide severity into three distinct levels: high, medium, low. This classification helps prioritize the issues identified during the audit based on their potential impact and urgency.

• High Severity Issues represent critical vulnerabilities or flaws that pose a significant risk to the system's security, functionality, or performance. These issues can lead to severe consequences such as fund loss, or major service disruptions if not addressed immediately. High severity issues typically require urgent attention and prompt remediation to mitigate potential damage and ensure the system's integrity and reliability.
• Medium Severity Issues are significant but not critical vulnerabilities or flaws that can impact the system's security, functionality, or performance. These issues might not pose an immediate threat but have the potential to cause considerable harm if left unaddressed over time. Addressing medium severity issues is important to maintain the overall health and efficiency of the system, though they do not require the same level of urgency as high severity issues.
• Low Severity Issues are minor vulnerabilities or flaws that have a limited impact on the system's security, functionality, or performance. These issues generally do not pose a significant risk and can be addressed in the regular maintenance cycle. While low severity issues are not critical, resolving them can help improve the system's overall quality and user experience by preventing the accumulation of minor problems over time.

Below is a summary of the vulnerabilities with their current status, highlighting the number of issues identified in each severity category and their resolution progress.

Findings

[High] Miscalculation may cause missed liquidations

In apps/liquidation-bot/src/handlers/liquidationHandler.ts, the calculation of liquidationBotBalance used this.liquidationBotBalances[underlyingBorrowToken] minus repayAmount. However, when determining whether liquidation is possible, the value of whether botHasBalanceToRepay is greater than repayAmount is used. This is equivalent to requiring this.liquidationBotBalances[underlyingBorrowToken] ≥ 2 * repayAmount. This excessively high requirement for liquidationBotBalance may cause a missed liquidation that should have been completed.