Inflation rate can be reduce by half at most if it get called every 1.99 interval.

[code423n4]

Lines of code

https://github.com/code-423n4/2022-12-gogopool/blob/aec9928d8bdce8a5a4efe45f54c39d4fc7313731/contracts/contract/RewardsPool.sol#L98

Vulnerability details

Impact

When doing inflation, function getInflationAmt() calculated number of intervals elapsed by dividing the duration with interval length.

function getInflationIntervalsElapsed() public view returns (uint256) {
    ProtocolDAO dao = ProtocolDAO(getContractAddress("ProtocolDAO"));
    uint256 startTime = getInflationIntervalStartTime();
    if (startTime == 0) {
        revert ContractHasNotBeenInitialized();
    }
    return (block.timestamp - startTime) / dao.getInflationIntervalSeconds();
}

As we can noticed that, this calculation is rounding down, it means if block.timestamp - startTime = 1.99 intervals, it only account for 1 interval.

However, when updating start time after inflating, it still update to current timestamp while it should only increased by intervalLength * intervalsElapsed instead.

addUint(keccak256("RewardsPool.InflationIntervalStartTime"), inflationIntervalElapsedSeconds); 
// @audit should only update to oldStartTime + inverval * numInterval
setUint(keccak256("RewardsPool.RewardsCycleTotalAmt"), newTokens);

Since default value of inflation interval = 1 days and reward cycle length = 14 days, so the impact is reduced. However, these configs can be changed in the future.

Proof of Concept

Consider the scenario:

1. Assume last inflation time is InflationIntervalStartTime = 100. InflationIntervalSeconds = 50.
2. At timestamp = 199, function getInflationAmt() will calculate

inflationIntervalsElapsed = (199 - 100) / 50 = 1
// Compute inflation for total inflation intervals elapsed
for (uint256 i = 0; i < inflationIntervalsElapsed; i++) {
    newTotalSupply = newTotalSupply.mulWadDown(inflationRate);
} // @audit only loop once.

3. And then in inflate() function, InflationIntervalStartTime is still updated to current timestamp, so InflationIntervalStartTime = 199.
4. If this sequence of actions are repeatedly used, we can easily see

InflationIntervalStartTime = 199, inflated count = 1
InflationIntervalStartTime = 298, inflated count = 2
InflationIntervalStartTime = 397, inflated count = 3
InflationIntervalStartTime = 496, inflated count = 4
InflationIntervalStartTime = 595, inflated count = 5

While at timestamp = 595, inflated times should be
(595 - 100) / 50 = 9 instead.

Tools Used

Manual Review

Recommended Mitigation Steps

Consider only increasing InflationIntervalStartTime by the amount of intervals time interval length.

[peritoflores]

Dupe #811

[GalloDaSballo]

Primary for now due to better explanation

[c4-judge]

GalloDaSballo marked the issue as primary issue

[c4-sponsor]

emersoncloud marked the issue as disagree with severity

[emersoncloud]

I agree with this issue but assets can't be stolen, lost or compromised directly. Medium severity is more appropriate https://docs.code4rena.com/awarding/judging-criteria#estimating-risk

[GalloDaSballo]

I have considered a Higher Severity, due to logical flaws.

However, I believe that the finding

• Relies on the Condition of being called less than intended
• Causes an incorrect amount of emissions (logically close to loss of Yield)

For those reasons, I believe Medium Severity to be the most appropriate

[c4-judge]

GalloDaSballo changed the severity to 2 (Med Risk)

[emersoncloud]

Acknowledged, not fixing in this first version of the protocol.

We can and will have rialto call startRewardsCycle if needed, and think it's unlikely to become delayed.

[c4-judge]

GalloDaSballo marked the issue as selected for report