LendgineRouter.mint() will always fail if collateral is a fee-on-transfer token

[code423n4]

Lines of code

https://github.com/code-423n4/2023-01-numoen/blob/main/src/periphery/LendgineRouter.sol#L142-L169
https://github.com/code-423n4/2023-01-numoen/blob/main/src/periphery/LendgineRouter.sol#L87-L124
https://github.com/code-423n4/2023-01-numoen/blob/main/src/core/Lendgine.sol#L95-L99

Vulnerability details

Impact

In LendgineRouter.sol, mintCallback() will transfer token1 (collateral) to Lendgine.sol contract upon minting of Power Tokens. If token1 is a fee-on-transfer token, these transfers will incur fees and the recipient (Lendgine.sol) will receive a deducted amount that is less than the collateral amount, causing the mint to always fail.

As Numoen is permissionless, anyone can create a pool with fee-on-transfer ERC20 tokens. Example of these fee-on-transfer tokens are STA and PAXG. And some tokens (e.g. USDT) has fee-on-transfer support disabled currently but may enable it in the future.

Proof of Concept

Start by calling LengineRouter.mint() to trigger the mintCallback() function.

https://github.com/code-423n4/2023-01-numoen/blob/main/src/periphery/LendgineRouter.sol#L142-L169

mintCallback() will initiate token1 transfers to Lendgine contract (which is the msg.sender) via swap(), SafeTransferLib.safeTransfer() and pay(). Lendgine contract will receive a reduced amount due to fee deduction on transfer.

https://github.com/code-423n4/2023-01-numoen/blob/main/src/periphery/LendgineRouter.sol#L87-L124

As Lendgine contract is expecting the full amount of collateral to be received based on the balance increase, the mint transaction will revert.

uint256 balanceBefore = Balance.balance(token1);
IMintCallback(msg.sender).mintCallback(collateral, amount0, amount1, liquidity, data);
uint256 balanceAfter = Balance.balance(token1);

if (balanceAfter < balanceBefore + collateral) revert InsufficientInputError();

https://github.com/code-423n4/2023-01-numoen/blob/main/src/core/Lendgine.sol#L95-L99

Recommended Mitigation Steps

One potential mitigation is to take into account the transfer fee during the transfer request. Another option is to block these customised tokens.

[c4-judge]

berndartmueller marked the issue as duplicate of #263

[c4-judge]

berndartmueller marked the issue as satisfactory