Minter.sol#startInflation() can be bypassed

[code423n4]

Lines of code

https://github.com/code-423n4/2022-05-backd/blob/2a5664d35cde5b036074edef3c1369b984d10010/protocol/contracts/tokenomics/Minter.sol#L104-L108

Vulnerability details

https://github.com/code-423n4/2022-05-backd/blob/2a5664d35cde5b036074edef3c1369b984d10010/protocol/contracts/tokenomics/Minter.sol#L104-L108

    function startInflation() external override onlyGovernance {
        require(lastEvent == 0, "Inflation has already started.");
        lastEvent = block.timestamp;
        lastInflationDecay = block.timestamp;
    }

As lastEvent and lastInflationDecay are not initialized in the constructor(), they will remain to the default value of 0.

However, the permissionless executeInflationRateUpdate() method does not check the value of lastEvent and lastInflationDecay and used them directly.

As a result, if executeInflationRateUpdate() is called before startInflation():

1. L190, the check of if _INFLATION_DECAY_PERIOD has passed since lastInflationDecay will be true, and initialPeriodEnded will be set to true right away;
2. L188, since the lastEvent in totalAvailableToNow += (currentTotalInflation * (block.timestamp - lastEvent)); is 0, the totalAvailableToNow will be set to totalAvailableToNow ≈ currentTotalInflation * 52 years, which renders the constrains of totalAvailableToNow incorrect and useless.

https://github.com/code-423n4/2022-05-backd/blob/2a5664d35cde5b036074edef3c1369b984d10010/protocol/contracts/tokenomics/Minter.sol#L115-L117

    function executeInflationRateUpdate() external override returns (bool) {
        return _executeInflationRateUpdate();
    }

https://github.com/code-423n4/2022-05-backd/blob/2a5664d35cde5b036074edef3c1369b984d10010/protocol/contracts/tokenomics/Minter.sol#L187-L215

    function _executeInflationRateUpdate() internal returns (bool) {
        totalAvailableToNow += (currentTotalInflation * (block.timestamp - lastEvent));
        lastEvent = block.timestamp;
        if (block.timestamp >= lastInflationDecay + _INFLATION_DECAY_PERIOD) {
            currentInflationAmountLp = currentInflationAmountLp.scaledMul(annualInflationDecayLp);
            if (initialPeriodEnded) {
                currentInflationAmountKeeper = currentInflationAmountKeeper.scaledMul(
                    annualInflationDecayKeeper
                );
                currentInflationAmountAmm = currentInflationAmountAmm.scaledMul(
                    annualInflationDecayAmm
                );
            } else {
                currentInflationAmountKeeper =
                    initialAnnualInflationRateKeeper /
                    _INFLATION_DECAY_PERIOD;

                currentInflationAmountAmm = initialAnnualInflationRateAmm / _INFLATION_DECAY_PERIOD;
                initialPeriodEnded = true;
            }
            currentTotalInflation =
                currentInflationAmountLp +
                currentInflationAmountKeeper +
                currentInflationAmountAmm;
            controller.inflationManager().checkpointAllGauges();
            lastInflationDecay = block.timestamp;
        }
        return true;
    }

https://github.com/code-423n4/2022-05-backd/blob/2a5664d35cde5b036074edef3c1369b984d10010/protocol/contracts/tokenomics/Minter.sol#L50-L51

    // Used for final safety check to ensure inflation is not exceeded
    uint256 public totalAvailableToNow;

https://github.com/code-423n4/2022-05-backd/blob/2a5664d35cde5b036074edef3c1369b984d10010/protocol/contracts/tokenomics/Minter.sol#L217-L227

    function _mint(address beneficiary, uint256 amount) internal returns (bool) {
        totalAvailableToNow += ((block.timestamp - lastEvent) * currentTotalInflation);
        uint256 newTotalMintedToNow = totalMintedToNow + amount;
        require(newTotalMintedToNow <= totalAvailableToNow, "Mintable amount exceeded");
        totalMintedToNow = newTotalMintedToNow;
        lastEvent = block.timestamp;
        token.mint(beneficiary, amount);
        _executeInflationRateUpdate();
        emit TokensMinted(beneficiary, amount);
        return true;
    }

Recommendation

Consider initializing lastEvent, lastInflationDecay in constructor().

or

Consider adding require(lastEvent != 0 && lastInflationDecay != 0, "...") to executeInflationRateUpdate().

[GalloDaSballo]

The warden has shown how startInflation can be bypassed, breaking the Access Control as well as the Sponsor Goal for Emissions.

Because of this I believe High Severity to be appropriate.

The sponsor has mitigated in a subsequent PR