29213 - [SC - High] The function always revert if _stakeNFT True d...

Submitted on Mar 10th 2024 at 20:34:07 UTC by @stiglitz for Boost | ZeroLend

Report ID: #29213

Report type: Smart Contract

Report severity: High

Target: https://github.com/zerolend/governance

Impacts:

• Permanent freezing of funds

• Temporary freezing of funds for at least 1 hour

Description

Brief/Intro

See the function safeTransferFrom::_createLock:

if (_stakeNFT) {
        _mint(address(this), _tokenId);
        bytes memory data = abi.encode(_to);
        safeTransferFrom(address(this), address(staking), _tokenId, data);
} else _mint(_to, _tokenId);

if _stakeNFT == True, the tx always reverts because msg.sender is the user who called createLock, and the user does not have approval for moving NFT owned by someone else. As we can see in the code, the NFT is minted to address(this), so the user is not the owner, and he needs approval from the contact.

However, the problem imho is the fact that the NFT is not even owned by a user but by the contract itself. Because if approval is implemented to make the transfer succeed, the user has no ability to get what is his.

Vulnerability Details

Let's also look at the OmnichainStaking::onERC721Received:

if (msg.sender == address(lpLocker)) {
        lpPower[tokenId] = lpLocker.balanceOfNFT(tokenId);
        _mint(from, lpPower[tokenId] * 4);
}

And also the function OmnichainStaking::unstakeLP:

function unstakeLP(uint256 tokenId) external { /
        _burn(msg.sender, lpPower[tokenId] * 4);
        lpLocker.safeTransferFrom(address(this), msg.sender, tokenId);
}

Lets say we have the approval and we create a lock with _stakeNFT == True. The function safeTransferFrom is executed where from == address(this) which is BaseLocker (LockerLP). NOT A USER.

Who is gonna call unstakeLP ? The tokens are owner by the LockerLP contract, and only the contract can unstake them.

Impact Details

The protocol does not work as it is supposed to, and if the function with _stakeNFT == True is called and it works (it does not right now) - The user will basically lose his invested money into veNFT and the voting power will be useless owned by the protocol contract.

I think the impact is very high and I would say critical. But because of the missing approval, the function does not work at all, so the impact is not there :D

References

Add any relevant links to documentation or code

Proof of Concept

Ve mock token

pragma solidity ^0.8.6;

import "@openzeppelin/contracts/token/ERC20/ERC20.sol";

// Example class - a mock class derived from ERC20
contract VeToken is ERC20 {
    constructor(uint256 initialBalance) ERC20("Ve Token", "VT") public {
        _mint(msg.sender, initialBalance);
    }
}

Re mock token

pragma solidity ^0.8.6;

import "@openzeppelin/contracts/token/ERC20/ERC20.sol";

// Example class - a mock class derived from ERC20
contract ReToken is ERC20 {
    constructor(uint256 initialBalance) ERC20("Re Token", "RT") public {
        _mint(msg.sender, initialBalance);
    }
}

X contract (ERC721 compatible)

import {ILocker} from "../contracts/interfaces/ILocker.sol";
import {OmnichainStaking} from "../contracts/locker/OmnichainStaking.sol";
import {PoolVoter} from "../contracts/voter/PoolVoter.sol";

contract X {
    ILocker public lpLocker;
    OmnichainStaking public staking;
    PoolVoter public poolVoter;

    constructor(address _lpLocker, address _staking, address _poolVoter){
        lpLocker  = ILocker(_lpLocker);
        staking   = OmnichainStaking(_staking);
        poolVoter = PoolVoter(_poolVoter);
    }

    function onERC721Received(
        address,
        address from,
        uint256 tokenId,
        bytes calldata data
    ) external returns (bytes4) {
        //lpLocker.safeTransferFrom(address(this), lpLocker, tokenId);

        return this.onERC721Received.selector;
    }

    // Unstake from omnichain staking
    function unstakeLP(uint256 tokenId) external { 
        staking.unstakeLP(tokenId);
    }
    // This allows me to send anywhere I want
    function send(address to, uint256 tokenId) external {
        lpLocker.safeTransferFrom(address(this), to, tokenId);
    }

    function vote(address[] calldata _poolVote,uint256[] calldata _weights) external {
        poolVoter.vote(_poolVote, _weights);
    }
}

Y contract (ERC721 compatible)

import {ILocker} from "../contracts/interfaces/ILocker.sol";