#42518 [SC-Critical] Incorrect handling of total staked funds will lead to protocol insolvency

Submitted on Mar 24th 2025 at 13:23:43 UTC by @dobrevaleri for Audit Comp | Yeet

• Report ID: #42518

• Report Type: Smart Contract

• Report severity: Critical

• Target: https://github.com/immunefi-team/audit-comp-yeet/blob/main/src/StakeV2.sol

• Impacts:

  • Protocol insolvency

Description

Brief/Intro

The StakeV2::executeRewardDistributionYeet() function incorrectly distributes pending withdrawals as rewards to remaining stakers, leading to protocol insolvency.

Vulnerability Details

The root cause lies in how totalSupply is decremented when users initiate withdrawals, while those tokens remain in the contract during the vesting period.

    function startUnstake(uint256 unStakeAmount) external {
        require(unStakeAmount > 0, "Amount must be greater than 0");
        require(stakedTimes[msg.sender] < STAKING_LIMIT, "Amount must be less then the STAKING_LIMIT constant"); // DOS protection https://github.com/Enigma-Dark/Yeet/issues/12
        _updateRewards(msg.sender);
        uint256 amount = balanceOf[msg.sender];
        require(amount >= unStakeAmount, "Insufficient balance");

        balanceOf[msg.sender] -= unStakeAmount;
@>      totalSupply -= unStakeAmount;

        uint256 start = block.timestamp;
        uint256 end = start + VESTING_PERIOD;
        vestings[msg.sender].push(Vesting(unStakeAmount, start, end));
        stakedTimes[msg.sender]++;
        emit VestingStarted(msg.sender, unStakeAmount, vestings[msg.sender].length - 1);
    }

$YEET tokens as rewards are distributed as:

    function executeRewardDistributionYeet(
        IZapper.SingleTokenSwap calldata swap,
        IZapper.KodiakVaultStakingParams calldata stakingParams,
        IZapper.VaultDepositParams calldata vaultParams
    ) external onlyManager nonReentrant {
@>      uint256 accRevToken0 = accumulatedDeptRewardsYeet();
        require(accRevToken0 > 0, "No rewards to distribute");
        require(swap.inputAmount <= accRevToken0, "Insufficient rewards to distribute");

        stakingToken.approve(address(zapper), accRevToken0);
        IERC20 token0 = IKodiakVaultV1(stakingParams.kodiakVault).token0();  //KodiakVault - KodiakIsland - 
        IERC20 token1 = IKodiakVaultV1(stakingParams.kodiakVault).token1();

        uint256 vaultSharesMinted;
        require(
            address(token0) == address(stakingToken) || address(token1) == address(stakingToken),
            "Neither token0 nor token1 match staking token"
        );

        if (address(token0) == address(stakingToken)) {
            (, vaultSharesMinted) = zapper.zapInToken0(swap, stakingParams, vaultParams);
        } else {
            (, vaultSharesMinted) = zapper.zapInToken1(swap, stakingParams, vaultParams);
        }

        _handleVaultShares(vaultSharesMinted);
        emit RewardsDistributedToken0(accRevToken0, rewardIndex);
    }

The accumulatedDeptRewardsYeet() function calculates rewards as:

function accumulatedDeptRewardsYeet() public view returns (uint256) {
    return stakingToken.balanceOf(address(this)) - totalSupply;  
}

When users call startUnstake(), their tokens are subtracted from totalSupply but remain in the contract until the vesting period ends. This causes accumulatedDeptRewardsYeet() to incorrectly count pending withdrawal tokens as distributable rewards.

Impact

Incorrect handling of the totalSupply will lead to distribution of user's stake as rewards, which will lead to insolvency.

Proof of Concept

Proof of Concept

1. User A stakes 1000 YEET tokens

2. User A calls startUnstake(1000)

   • totalSupply decreases by 1000

   • Tokens remain in contract during 10 day vesting

3. During vesting period, manager calls executeRewardDistributionYeet()

   • accumulatedDeptRewardsYeet() returns 1000 (contract balance - totalSupply)

   • The 1000 tokens are distributed to other stakers as rewards

4. After vesting period, User A tries to withdraw but contract lacks funds