51992 sc high dust accumulation in arctoken during yield distribution

Submitted on Aug 7th 2025 at 06:21:29 UTC by @Killua for Attackathon | Plume Network

• Report ID: #51992

• Report Type: Smart Contract

• Report severity: High

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

Description

Brief / Intro

In ArcToken::distributeYield, the yield distribution mechanism has a logical flaw which causes dust accumulation of yieldTokens in the contract. There is no function to withdraw these dust yield tokens.

Vulnerability Details

• distributeYield() uses a "last holder gets remainder" approach to handle rounding errors, but fails to account for cases where the last holder is yield-restricted (e.g., blacklisted from receiving yields).

• The last holder is intended to receive lastShare = amount - distributedSum to ensure complete distribution without dust.

• If the last holder is not allowed to receive yield, this lastShare remains in the contract.

• There is no function to withdraw accumulated yieldTokens from the contract.

• Distribution cycles use only the input amount parameter and never the contract's existing balance of yieldTokens, so each cycle compounds the problem and increases dust.

Impact Details

• Not all yield is distributed to holders; some yield becomes stuck in the contract.

• Over time, the dust amount increases with each distribution cycle.

• Without a recovery mechanism, these funds remain stuck.

High-severity: Funds (yieldTokens) become permanently stuck in the contract if recipients are skipped (e.g., yield-restricted). This leads to progressively increasing undistributed yield.

Proof of Concept

Test reproducing dust accumulation (expand to view)

function test_YieldDustAccumulation() public {
        // Setup: Give tokens to bob and charlie
        vm.prank(owner);
        token.transfer(bob, 20e18);      // Bob: 20e18
        vm.prank(owner);
        token.transfer(charlie, 20e18);  // Charlie: 20e18
        // Now we have: Owner: 860e18, Alice: 100e18, Bob: 20e18, Charlie: 20e18
        
        // Blacklist charlie (will be skipped in distribution)
        yieldBlacklistModule.addToBlacklist(charlie);
        
        // Record contract balance before distribution
        uint256 contractBalanceBefore = yieldToken.balanceOf(address(token));
   
    uint256 aliceYieldBefore = yieldToken.balanceOf(alice);
    uint256 bobYieldBefore = yieldToken.balanceOf(bob);
    uint256 charlieYieldBefore = yieldToken.balanceOf(charlie);
    

        // Distribute yield 
        //3 cycles of 100e18 yield
       
 for (uint256 i = 0; i < 3; i++) {
        uint256 yieldAmount = 100e18;
        yieldToken.approve(address(token), yieldAmount);
        token.distributeYield(yieldAmount);
     
  // Record balances after distribution
    uint256 contractBalanceAfter = yieldToken.balanceOf(address(token));
    uint256 aliceYieldAfter = yieldToken.balanceOf(alice);
    uint256 bobYieldAfter = yieldToken.balanceOf(bob);
    uint256 charlieYieldAfter = yieldToken.balanceOf(charlie);
    
   

    console.log("=== Net balances after cycle %d ===", i);
    console.log("Alice received: %e", aliceYieldAfter - aliceYieldBefore);
    console.log("Bob received:", bobYieldAfter - bobYieldBefore);
    console.log("Charlie received (should be 0):", charlieYieldAfter - charlieYieldBefore);
    console.log("contract yield token balance remaining:", contractBalanceAfter - contractBalanceBefore);
  
        console.log("Dust accumulated after cycle %d:", i, contractBalanceAfter - contractBalanceBefore);
    }
}

Notes / Remediation Ideas

• Ensure the "remainder to last holder" logic only applies to eligible yield recipients; if the intended last recipient is ineligible, select the last eligible recipient or redistribute the remainder.

• Alternatively, change distribution logic to consider the contract's existing yieldToken balance (aggregate available yield) and handle rounding such that no tokens are left undistributable.

• Provide an admin recovery function to withdraw or redistribute dust balances (with appropriate access controls and auditing).