The do_swap function only allows belief prices down to 1%.

[gangov]

affected file: contracts/pool/src/contract.rs _location: doswap

The do_swap function allows the user to specify a belief_price. This value works as a slippage protection for the user’s swap, protecting the user from performing a bad swap. At the beginning of do_swap we can find:

Code snippet from the do_swap function. The code transforms belief_price to a Decimal.

let belief_price = belief_price.map(Decimal::percent);

From the above code, we know that belief_price is given as a percent value. Hence, the minimum belief_price that a user can use is 1, which will be transformed to a Decimal with numerator of 1e16.

Looking at the assert_max_spread function, we find:

Code snippet from the assert_max_spread function. The code computes the expected_return from the swap operation.

let expected_return = belief_price.map(|price| offer_amount * price);

If belief_price were 1e16 then this will yield: offer_amount * 1e16 / 1e18, which is equal to 1% of offer_amount.

The above is problematic since the tokens in the pool may have a price relation that requires the user to express a ratio below 1%. For example, USDC and ETH have a 1 ETH / 2600 USDC ratio, which is equal to 0.03%.

Impact

Users will not have protection for price fluctuations for token pairs with a price relation smaller than 1%.

Recommendation

Allow a greater range of belief_price.

[ueco-jb]

Duplicate https://github.com/Phoenix-Protocol-Group/phoenix-contracts/issues/212