56348 sc insight incorrect apy calculation in mytstrategy approxapy causes underreported yields

Submitted on Oct 14th 2025 at 20:05:31 UTC by @Gakarot for Audit Comp | Alchemix V3

• Report ID: #56348

• Report Type: Smart Contract

• Report severity: Insight

• Target: https://github.com/alchemix-finance/v3-poc/blob/immunefi_audit/src/MYTStrategy.sol

• Impacts:

Description

Brief/Intro

MYTStrategy::_approxAPY() incorrectly divides the squared APR term by 2 * SECONDS_PER_YEAR, instead of just 2, effectively nullifying compounding growth in APY approximation. This leads to misreported yield rates across strategies.

Impact Details

APY and APR become near identical, misleading users and allocators relying on the snapshotYield() results for decision making or display.

References

Link to Code ---> https://github.com/alchemix-finance/v3-poc/blob/b2e2aba046c36ff5e1db6f40f399e93cd2bdaad0/src/MYTStrategy.sol#L230-L234

Mitigation

To correct the APY miscalculation, the squared APR term should not be divided by SECONDS_PER_YEAR. The denominator should only be 2, restoring the correct compounding approximation formula. Specifically, in MYTStrategy::_approxAPY(), replace:

-return apr + aprSq / (2 * SECONDS_PER_YEAR);
+return apr + aprSq / 2;

Proof of Concept

Proof of Concept

• Paste this test in file location: v3-poc/src/test/MYTStrategy.t.sol

• Runnable Command: MAINNET_RPC_URL="https://eth-mainnet.g.alchemy.com/v2/YOUR_KEY" forge test --mt test_POC_IncorrectAPYCalculation -vvvvv

• Note: This PoC runs on a local Foundry mainnet fork using a read only Alchemy RPC key.

function test_POC_IncorrectAPYCalculation() public view {
        // Setup a base per-second rate that equals roughly 5% APR
        uint256 ratePerSecWad = 1.585e9; // 0.05 / 31_557_600 * 1e18

        // Simulate what snapshotYield() would call internally
        uint256 secondsPerYear = strategy.SECONDS_PER_YEAR();
        uint256 apr = ratePerSecWad * secondsPerYear;
        uint256 aprSq = (apr * apr) / 1e18;

        // Buggy formula used in strategy
        uint256 buggyApy = apr + (aprSq / (2 * secondsPerYear));

        // Correct compounding approximation
        uint256 correctApy = apr + (aprSq / 2);

        console.log("Proof of Incorrect APY Calculation");
        console.log("Base APR (should be ~5%):", apr);
        console.log("Buggy APY (contract formula):", buggyApy);
        console.log("Correct APY (mathematical):", correctApy);

    }