51910 sc low inconsistent yield token transfer logic causes permanent loss of yield in distributeyield

• Report ID: #51910

• Report Type: Smart Contract

• Report severity: Low

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

• Impacts:

  • Theft of unclaimed yield

Description

Brief / Intro

When distributing yield by calling ArcToken::distributeYield() while effectiveTotalSupply == 0, the yield tokens are still sent to the contract even though there are no addresses to receive them. These tokens will be stuck in the contract.

Vulnerability Details

Both yield distribution functions ensure totalSupply() is greater than zero (otherwise they revert). However, effectiveTotalSupply can still be zero when all addresses holding ArcTokens are yield-restricted.

• ArcToken::distributeYieldWithLimit() checks that effectiveTotalSupply is greater than zero before transferring the yield tokens to the contract, and returns early if it's zero.

• ArcToken::distributeYield() transfers the yield token amount to the contract first, then checks if effectiveTotalSupply == 0 and may return early.

Because distributeYield() performs the token transfer before the effectiveTotalSupply check, tokens can be sent into the contract when there are no eligible recipients, leaving them permanently stuck. This behavior is inconsistent with distributeYieldWithLimit().

Impact Details

ArcToken::distributeYield() transfers the yield token amount to the contract even when effectiveTotalSupply == 0. This results in yield tokens being permanently stuck in the contract and is inconsistent with the guarded flow used in ArcToken::distributeYieldWithLimit().

References

Code references are provided throughout the original report and implementation:

• distributeYield source: https://github.com/immunefi-team/attackathon-plume-network/blob/580cc6d61b08a728bd98f11b9a2140b84f41c802/arc/src/ArcToken.sol#L388-L460

• totalSupply() check: https://github.com/immunefi-team/attackathon-plume-network/blob/580cc6d61b08a728bd98f11b9a2140b84f41c802/arc/src/ArcToken.sol#L397-L400

• yield transfer in distributeYield: https://github.com/immunefi-team/attackathon-plume-network/blob/580cc6d61b08a728bd98f11b9a2140b84f41c802/arc/src/ArcToken.sol#L407-L408

• effectiveTotalSupply early return in distributeYield: https://github.com/immunefi-team/attackathon-plume-network/blob/580cc6d61b08a728bd98f11b9a2140b84f41c802/arc/src/ArcToken.sol#L425-L428

• distributeYieldWithLimit conditional transfer: https://github.com/immunefi-team/attackathon-plume-network/blob/580cc6d61b08a728bd98f11b9a2140b84f41c802/arc/src/ArcToken.sol#L518-L528

Proof of Concept

1

Reproduce distribution when no eligible holders exist

Call ArcToken::distributeYield() to distribute yield to token holders while skipping restricted accounts.

Reference: https://github.com/immunefi-team/attackathon-plume-network/blob/580cc6d61b08a728bd98f11b9a2140b84f41c802/arc/src/ArcToken.sol#L388-L460

Assume there are currently no non-restricted holders.

2

totalSupply() check passes and tokens are transferred

totalSupply() of ArcToken is greater than zero, so the call proceeds.

Reference: https://github.com/immunefi-team/attackathon-plume-network/blob/580cc6d61b08a728bd98f11b9a2140b84f41c802/arc/src/ArcToken.sol#L397-L400

The yield token amount is then sent to the contract:

Reference: https://github.com/immunefi-team/attackathon-plume-network/blob/580cc6d61b08a728bd98f11b9a2140b84f41c802/arc/src/ArcToken.sol#L407-L408

3

effectiveTotalSupply == 0 triggers early return but tokens are already stuck

After the transfer, the function checks effectiveTotalSupply. If it equals zero, the function returns early:

Reference: https://github.com/immunefi-team/attackathon-plume-network/blob/580cc6d61b08a728bd98f11b9a2140b84f41c802/arc/src/ArcToken.sol#L425-L428

Because the tokens were transferred to the contract before this check, they remain stuck with no eligible recipients. This contrasts with distributeYieldWithLimit(), which performs the effective supply check before transferring tokens.

Reference: https://github.com/immunefi-team/attackathon-plume-network/blob/580cc6d61b08a728bd98f11b9a2140b84f41c802/arc/src/ArcToken.sol#L518-L528

Suggested Mitigation (non-exhaustive)

• Make the effectiveTotalSupply == 0 check before performing any token transfers in distributeYield(), aligning its flow with distributeYieldWithLimit().

• Alternatively, revert early (or skip transfer) if there are no eligible recipients to avoid tokens being stranded in the contract.