StabilizerNode Is Vulnerable To Sandwich Attacks

[code423n4]

Handle

leastwood

Vulnerability details

Impact

The permissionless stabilize function in StabilizerNode is called to correct deviations in the Malt token price. When the price of Malt has appreciated above its peg, the function simply distributes rewards to LP token holders, effectively diluting the total Malt token supply. As the _distributeSupply function interacts with a Uniswap pool without performing slippage checks, an attacker can call this function and launch a sandwich attack in combination with a flash loan to steal funds.

A malicious user is potentially able to steal rewards that would otherwise be distributed to the protocol's users. As such, this issue should be considered high risk as this results in loss of funds.

Proof of Concept

Consider the following scenario:

• An attacker flashloans and buys rewards tokens from the uniswap pool.
• The attacks calls the stabilize function in StabilizerNode.
• The StabilizerNode contract buys rewards tokens at an inflated price.
• The attacker sells their rewards tokens and pays back their flashloan.

As shown above, attackers are able to siphon funds from users overtime.

https://github.com/code-423n4/2021-11-malt/blob/main/src/contracts/StabilizerNode.sol#L236
https://github.com/code-423n4/2021-11-malt/blob/main/src/contracts/DexHandlers/UniswapHandler.sol#L160-L183

Tools Used

Manual code review
Referenced Mochi review.

Recommended Mitigation Steps

Consider performing slippage checks within the _distributeSupply function. This can be done by simply performing a lower bounds check on the output amount received when exchanging Malt tokens for rewards tokens.

[0xScotch]

#56

[GalloDaSballo]

Duplicate of #56