#42355 [SC-Medium] Compounding can be sandwich attacked

Submitted on Mar 23rd 2025 at 08:52:44 UTC by @Oxl33 for Audit Comp | Yeet

• Report ID: #42355

• Report Type: Smart Contract

• Report severity: Medium

• Target: https://github.com/immunefi-team/audit-comp-yeet/blob/main/src/contracts/MoneyBrinter.sol

• Impacts:

  • Theft of unclaimed royalties

Description

Description:

Attackers (MEV bots) can sandwich attack manager's transaction, when he calls MoneyBrinter::compound, which leads to part of the rewards going to the attacker, instead of to regular users.

Example scenario:

Reminder - vault has no max-deposit/max-mint restrictions (ERC4626::maxDeposit and ERC4626::maxMint functions not overridden), so attackers can take a flashloan and deposit as much as they want, to end up with the majority of vault shares after depositing.

State before frontrun (normal state):

• assets in vault: 100 000e18

• shares in vault: 100 000e23

State before compound (attacker frontran and deposited 100 000e18 assets):

• assets in vault: 200 000e18

• shares in vault: 200 000e23

State after compound (before backrun):

• assets in vault: 210 000e18 (10 000e18 assets added as rewards)

• shares in vault: 200 000e23 (no shares minted)

State after backrun (Attacker withdrew all his shares):

• assets in vault: 105 000e18 (only 5 000e18 of rewards left)

• shares in vault: 100 000e23

If fee is 1%, fee = 1 039.6e18, profit for attacker = 5 000e18 - 1 039.6e18 = 3 960.4e18

One way to fight this attack is for owner to increase exit fee before calling compound to make the attack unprofitable, then decrease the fee after. But this is not a convenient solution, because of these reasons:

1. It requires owner AND manager to be involved for every compound action (only owner can adjust exit fee, so manager alone cannot complete the process)

2. If there will be a time where manager calls compound without increasing the fee, especially if current fee is 0%, then the sandwich attacker will steal up to 99% of the newly added rewards from regular users

Easier solution to fight this type of attack would be to prevent withdrawals in the same block as deposits, or give the manager a function to pause the ability to deposit, so he can call it before calling compound.

Impact:

I believe the best fitting impact for this issue is Theft of unclaimed royalties, because attackers can steal newly added rewards, before regular users have the chance to claim them.

Recommended Mitigation:

Consider implementing withdrawal/redeem prevention in the same block as a deposit/mint, this will protect against attackers who need to take out a flashloan for the attack.

Additionally, consider implementing a function that pauses the ability to deposit/mint, and give the rights to call it only to manager, so he can call it before calling compound.

Proof of Concept

Proof of Concept:

Consider this scenario:

1. Manager calls MoneyBrinter::harvestBeradromeRewards

2. Manager calls MoneyBrinter::compound

3. MEV bot sees this transaction in the mempool, and frontruns it with a big deposit into the vault

4. Manager's compound transaction goes through after the bot already deposited

5. MEV bot backruns the compound and redeems all his shares, receiving more assets than he deposited, due to increased totalAssets, but the same totalSupply

6. Regular users are left with less rewards, and the MEV bot profits from it