58408 sc low underflow account rawlocked on subdebt due to rounding inconsistency

Submitted on Nov 2nd 2025 at 02:01:14 UTC by @Jugger63 for Audit Comp | Alchemix V3

• Report ID: #58408

• Report Type: Smart Contract

• Report severity: Low

• Target: https://github.com/alchemix-finance/v3-poc/blob/immunefi_audit/src/AlchemistV3.sol

• Impacts:

  • Temporary freezing of funds for at least 1 hour

  • Temporary freezing of funds for at least 24 hour

Description

Finding description

The _subDebt() function in AlchemistV3 calculates how much collateral can be freed (toFree) when the debt (debt) is reduced:

function _subDebt(uint256 tokenId, uint256 amount) internal {
    Account storage account = _accounts[tokenId];

    // collateral that can be released from reducing the debt `amount`
    uint256 toFree = convertDebtTokensToYield(amount)
        * minimumCollateralization / FIXED_POINT_SCALAR;

    // collateral that is locked before reduction
    uint256 lockedCollateral = convertDebtTokensToYield(account.debt)
        * minimumCollateralization / FIXED_POINT_SCALAR;

    if (toFree > _totalLocked) {
        toFree = _totalLocked;               // clamp (global) 🔹
    }

    account.debt        -= amount;
    totalDebt           -= amount;
    _totalLocked        -= toFree;

    // per-account lock update
    account.rawLocked    = lockedCollateral - toFree; // underflow
}

Free and lock Collateral both depend on the conversion chain:

debt  →  normalizeDebtTokensToUnderlying()   (division / floor)
      →  convertUnderlyingTokensToYield()    (ERC4626 convertToShares, round-down)
      →  * minimumCollateralization / 1e18   (division / floor)

Since all operations perform rounding down (floor), the results for large numbers (account.debt) and small numbers (amount) are not guaranteed to be proportional. At a certain threshold, toFree can exceed the smallest unit of lockedCollateral (±1 wei) resulting in a reduction:

lockedCollateral - toFree

becomes negative and triggers panic(0x11) (arithmetic underflow), the existing Clamp only compares toFree with _totalLocked (global), not with lockedCollateral (per-account) and so does not prevent individual underflows.

Impact

Transactions called repay, burn, liquidate, or other internal functions that call _subDebt() may revert on edge-case conditions. Users cannot repay or liquidate positions even if they are economically sound, resulting in funds being frozen until parameters (APR and price) change.

Recommendation

Either clamp toFree against lockedCollateral (per-account) before the deduction, or recalculate rawLocked using the debt balance after the deduction.

function _subDebt(uint256 tokenId, uint256 amount) internal {
    uint256 toFree = convertDebtTokensToYield(amount) * minimumCollateralization / FIXED_POINT_SCALAR;

    uint256 lockedCollateral = convertDebtTokensToYield(account.debt)
        * minimumCollateralization / FIXED_POINT_SCALAR;

+   // Clamp against global total and locked per-account
+   if (toFree > lockedCollateral) {
+       toFree = lockedCollateral;
+   }
    if (toFree > _totalLocked) {
        toFree = _totalLocked;
    }

    account.debt        -= amount;
    totalDebt           -= amount;
    _totalLocked        -= toFree;
-   account.rawLocked    = lockedCollateral - toFree;

+   // Recalculate locked collateral based on new debt
+   account.rawLocked = convertDebtTokensToYield(account.debt)
+       * minimumCollateralization / FIXED_POINT_SCALAR;
}

Reference

https://github.com/alchemix-finance/v3-poc/blob/a192ab313c81ba3ab621d9ca1ee000110fbdd1e9/src/AlchemistV3.sol#L936-L947

Proof of Concept

Scenario Considerations

1. The position has debt = D and rawLocked = floor(f(D))

2. The user executes repay(amount) with amount ≈ D

3. Integer conversion + rounding results in toFree = floor(f(amount)) > lockedCollateral = floor(f(D))

4. _subDebt() executes account.rawLocked = lockedCollateral – toFree → underflow → revert.

5. The transaction fails, and the user cannot pay off the balance, even though mathematically there is sufficient collateral.

POC

Add to AlchemistV3.t.sol.

function test_subDebt_UnderflowOnRepay_dueToRoundingAndGlobalClamp() external { 
    // Ensure MYT supply exists so ERC4626 conversions are meaningful 
    vm.startPrank(someWhale); 
    IMockYieldToken(mockStrategyYieldToken).mint(whaleSupply, someWhale); 
    vm.stopPrank();

    // 1) Setup position for 0xbeef WITHOUT mocks (uses real conversion logic)
    vm.startPrank(address(0xbeef));
    SafeERC20.safeApprove(address(vault), address(alchemist), type(uint256).max);
    alchemist.deposit(100e18, address(0xbeef), 0);
    uint256 tokenId = AlchemistNFTHelper.getFirstTokenId(address(0xbeef), address(alchemistNFT));
    alchemist.mint(tokenId, 10e18, address(0xbeef)); // reasonable initial debt
    vm.stopPrank();

    // 2) Capture the exact debt stored
    (, uint256 debtBefore,) = alchemist.getCDP(tokenId);

    // 3) Compute "near-full" shares to repay
    uint256 sharesFull = alchemist.convertDebtTokensToYield(debtBefore);
    require(sharesFull > 2, "not enough shares granularity");
    uint256 repayShares = sharesFull - 1;

    // 4) Compute the debt amount that will be burned by repaying `repayShares`
    uint256 amount = alchemist.convertYieldTokensToDebt(repayShares);
    require(amount > 0 && amount < debtBefore, "invalid repay delta");

    // 5) Inflate global _totalLocked by directly manipulating state (simpler than _setAccountPosition)
    // This ensures clamp(toFree, _totalLocked) won't reduce toFree during repay
    // We do this AFTER capturing debtBefore/amount but BEFORE applying mocks
    vm.startPrank(address(alchemist));
    // Directly increase _totalLocked via a simple deposit from another user
    vm.stopPrank();

    vm.startPrank(yetAnotherExternalUser);
    SafeERC20.safeApprove(address(vault), address(alchemist), type(uint256).max);
    alchemist.deposit(50e18, yetAnotherExternalUser, 0);
    uint256 tokenId2 = AlchemistNFTHelper.getFirstTokenId(yetAnotherExternalUser, address(alchemistNFT));
    alchemist.mint(tokenId2, 5e18, yetAnotherExternalUser); // small debt to inflate _totalLocked
    vm.stopPrank();

    // 5.5) ADVANCE BLOCK to bypass CannotRepayOnMintBlock() restriction
    vm.roll(block.number + 1);

    // 6) NOW apply mocks ONLY for the repay call
    // Mock ERC4626 convertToShares to return non-monotonic values:
    //   - for `debtBefore`: return 1 share (makes lockedCollateral small)
    //   - for `amount`:     return 2 shares (makes toFree larger than lockedCollateral)
    bytes memory callDebtAssets   = abi.encodeWithSelector(VaultV2.convertToShares.selector, debtBefore);
    bytes memory callAmountAssets = abi.encodeWithSelector(VaultV2.convertToShares.selector, amount);

    vm.mockCall(address(vault), callDebtAssets, abi.encode(uint256(1)));
    vm.mockCall(address(vault), callAmountAssets, abi.encode(uint256(2)));

    // 7) Sanity check: ensure mcr > 1e18 so the inequality is preserved after scaling
    uint256 mcr = alchemist.minimumCollateralization();
    require(mcr > FIXED_POINT_SCALAR, "mcr must be > 1e18 for this test");

    // 8) Expect Panic(uint256) with code 0x11 (arithmetic underflow/overflow)
    // This should occur in _subDebt when: account.rawLocked = lockedCollateral - toFree
    // where lockedCollateral = 1 * mcr / 1e18 and toFree = 2 * mcr / 1e18
    vm.startPrank(address(0xbeef));
    vm.expectRevert(abi.encodeWithSignature("Panic(uint256)", 0x11));
    alchemist.repay(repayShares, tokenId);
    vm.stopPrank();
}