57024 sc low wethbalancebefore is computed after withdrawal in deallocate function in morphoyearnogwethstrategy contract leading to systematic strategydeallocationloss event emission

Submitted on Oct 22nd 2025 at 18:59:02 UTC by @Tadev for Audit Comp | Alchemix V3

• Report ID: #57024

• Report Type: Smart Contract

• Report severity: Low

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

• Impacts:

  • Contract fails to deliver promised returns, but doesn't lose value

Description

Brief/Intro

The MorphoYearnOGWETHStrategy contract implements the _deallocate function as follows:

    function _deallocate(uint256 amount) internal override returns (uint256) {
        vault.withdraw(amount, address(this), address(this));
        uint256 wethBalanceBefore = TokenUtils.safeBalanceOf(address(weth), address(this));
        uint256 wethBalanceAfter = TokenUtils.safeBalanceOf(address(weth), address(this));
        uint256 wethRedeemed = wethBalanceAfter - wethBalanceBefore;
        if (wethRedeemed < amount) {
            emit StrategyDeallocationLoss("Strategy deallocation loss.", amount, wethRedeemed);
        }
        require(wethRedeemed + wethBalanceBefore >= amount, "Strategy balance is less than the amount needed");
        require(TokenUtils.safeBalanceOf(address(weth), address(this)) >= amount, "Strategy balance is less than the amount needed");
        TokenUtils.safeApprove(address(weth), msg.sender, amount);
        return amount;
    }

Contrary to all other strategies in scope, this one computes wethBalanceBefore after calling vault.withdraw . This means wethBalanceBefore == wethBalanceAfter and therefore wethRedeemed == 0. Hence, the line emit StrategyDeallocationLoss("Strategy deallocation loss.", amount, wethRedeemed); is always executed, emitting the event of deallocation loss during each deallocation.

Vulnerability Details

The vulnerability lies in the incorrect logic in _deallocate. The snippet:

        vault.withdraw(amount, address(this), address(this));
        uint256 wethBalanceBefore = TokenUtils.safeBalanceOf(address(weth), address(this));
        uint256 wethBalanceAfter = TokenUtils.safeBalanceOf(address(weth), address(this));

should be :

        uint256 wethBalanceBefore = TokenUtils.safeBalanceOf(address(weth), address(this));
        vault.withdraw(amount, address(this), address(this));
        uint256 wethBalanceAfter = TokenUtils.safeBalanceOf(address(weth), address(this));

Impact Details

The impact of this issue is low as it is related to incorrect logic in the contract, leading to wrong emission of events.

Proof of Concept

Proof of Concept

Please copy paste the following test in MorphoYearnOGWETHStrategyTest.t.sol file:

    function testStrategyDeallocationLoss(uint256 amountToAllocate, uint256 amountToDeallocate) public {
        amountToAllocate = bound(amountToAllocate, 1e18, testConfig.vaultInitialDeposit);
        amountToDeallocate = amountToAllocate;

        vm.startPrank(vault);
        deal(WETH, strategy, amountToAllocate);
        bytes memory prevAllocationAmount = abi.encode(0);
        IMYTStrategy(strategy).allocate(prevAllocationAmount, amountToAllocate, "", address(vault));

        uint256 initialRealAssets = IMYTStrategy(strategy).realAssets();
        require(initialRealAssets > 0, "Initial real assets is 0");
        
        bytes memory prevAllocationAmount2 = abi.encode(amountToAllocate);
        vm.warp(block.timestamp + 1 days);
        
        vm.expectEmit(strategy);
        emit StrategyDeallocationLoss("Strategy deallocation loss.", amountToAllocate, 0);
        IMYTStrategy(strategy).deallocate(prevAllocationAmount2, amountToDeallocate, "", address(vault));
        vm.stopPrank();
    }

This test:

• deposits amountToAllocate in the vault

• withdraws amountToAllocate 1 day later

Deallocation is successful, but the StrategyDeallocationLoss event is emitted with a value of 0 for the actual reedemed amount, which is incorrect.