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code-423n4 / 2023-05-venus-findings

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BNB CHAIN HALT IMPACT AND AFTERMATH #526

Closed code423n4 closed 1 year ago

code423n4 commented 1 year ago

Lines of code

https://github.com/code-423n4/2023-05-venus/blob/main/contracts/VToken.sol#L180-L202 https://github.com/code-423n4/2023-05-venus/blob/main/contracts/VToken.sol#L255-L275 https://github.com/code-423n4/2023-05-venus/blob/main/contracts/VToken.sol#L292-L299

Vulnerability details

Impact

A halt of the BNB Chain (Binance Smart Chain) can have severe consequences for all applications and services relying on its functionality. The immediate impact would be the inability to execute transactions, potentially causing significant disruption to services and financial loss for users and service providers alike.

For the Venus protocol, a BNB Chain halt would mean that no user could interact with the protocol - this includes not being able to mint or redeem vTokens, repay a loan, liquidate a collateral etc. All pending transactions would also remain unprocessed until the chain is operational again.

Proof of Concept

A halt of the BNB Chain could occur due to a variety of reasons - network congestion, software bugs, attacks on the network, or a catastrophic failure of the underlying infrastructure.

Given that all Binance Smart Chain nodes are operated by the Binance organization, a systemic issue within the organization (e.g., infrastructure failure or internal sabotage) could theoretically lead to a complete halt.

An example scenario would be:

  1. A critical bug in the BNB Chain node software causes the nodes to crash.
  2. All transactions on the network, including those involving Venus, are halted.
  3. Users are unable to interact with Venus or any other smart contracts on the BNB Chain.
  4. Services relying on Venus (e.g., DeFi platforms) may also experience disruption.
  5. Uncertainty and potential panic in the market could lead to severe financial implications.

Recommended Mitigation Steps

While it's impossible for Venus to prevent a BNB Chain halt, there are several strategies that can be employed to mitigate the impact:

  1. Cross-Chain Functionality: Implement functionality that allows Venus to operate across multiple chains. This way, if one chain halts, Venus can continue to operate on other chains.

  2. Emergency Pause Mechanism: Implement an emergency pause mechanism that can halt all operations in case of a severe issue with the BNB Chain. This can prevent potential losses due to unforeseen behavior in such a scenario.

  3. Regular System Checks: Perform regular checks of the BNB Chain's health and have contingency plans in place in case of detected anomalies.

  4. User Education: Ensure users are aware of the risks associated with a potential BNB Chain halt and advise them on what steps to take in such an event.

  5. Insurance or Compensation Fund: Consider creating an insurance or compensation fund that can be used to compensate users for losses incurred as a result of a BNB Chain halt.

Each of these strategies has its own trade-offs in terms of cost, complexity, and effectiveness, and the most appropriate choice depends on the specific needs and constraints of the Venus protocol.

Assessed type

Other

c4-judge commented 1 year ago

0xean changed the severity to QA (Quality Assurance)

c4-judge commented 1 year ago

0xean marked the issue as grade-c