50507 sc high non atomic yield distribution may lead to theft of yield

Submitted on Jul 25th 2025 at 15:04:50 UTC by @a16 for Attackathon | Plume Network

• Report ID: #50507

• Report Type: Smart Contract

• Report severity: High

• Target: https://github.com/immunefi-team/attackathon-plume-network/blob/main/arc/src/ArcToken.sol

• Impacts:

  • Theft of unclaimed yield

Description

Brief/Intro

The function distributeYieldWithLimit() allows the Yield Distributor to distribute the yield in a non-atomic way. This allows for users to transfer Arc Tokens to other addresses between the calls, doubling their yield for the same token balance.

Vulnerability Details

distributeYieldWithLimit() rewards Arc Token holders based on their Arc Token balance, distributing yield proportional to their shares. When yield distribution is divided into separate transactions using distributeYieldWithLimit(), incorrect yield distribution can occur if Arc Token balances change between calls. This can happen due to benign transfers or malicious actions.

A malicious actor who already received their fair share during an earlier distributeYieldWithLimit() call can transfer their Arc Tokens to a different address that has not yet been processed; when that later address is processed, it will be credited again for the transferred balance. Additionally, if the Yield Token has an intrinsic callback (e.g., ERC-777), the same problem might occur even for an atomic distributeYield() call, because transfers lack a nonReentrant modifier.

Impact Details

Malicious users can multiply their yields by a factor proportional to the number of distributeYieldWithLimit() calls (or distribution chunks), effectively stealing yield that should have gone to others.

Proof of Concept

Consider this scenario:

• Address A (attacker) is among the first entries in the holders array and has 100 Arc Tokens.

• Address B (also attacker-controlled) appears later in the holders array (for example, in the second third if there are 1000 addresses) and has 1 Wei of Arc Tokens.

1

First step

The Yield Distributor calls distributeYieldWithLimit() for the first third of holders. It iterates over address A and transfers yield proportional to A's 100 Arc Token balance.

2

Second step

The attacker immediately transfers 100 Arc Tokens from address A to address B.

3

Third step

The Yield Distributor calls distributeYieldWithLimit() for the second third of holders. It iterates over address B and transfers yield proportional to B's current 100 Arc Token balance. The transaction does not revert.

4

Fourth step

The Yield Distributor calls distributeYieldWithLimit() for the final third of holders. This transaction reverts (or at minimum results in an incorrect final distribution) because addresses A and B combined have received more yield than they were entitled to.

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References:

• Target contract: https://github.com/immunefi-team/attackathon-plume-network/blob/main/arc/src/ArcToken.sol