Lines of code

https://github.com/code-423n4/2024-07-reserve/blob/3f133997e186465f4904553b0f8e86ecb7bbacbf/contracts/p1/RToken.sol#L320-L334 https://github.com/code-423n4/2024-07-reserve/blob/3f133997e186465f4904553b0f8e86ecb7bbacbf/contracts/p1/RToken.sol#L339-L343

Vulnerability details

The redeemCustom() function enables users to redeem their RTokens for a custom basket of underlying assets in specified proportions. However, there is an issue in the redeemCustom() function that prevents users from performing custom redemptions when the expectedERC20sOut array is empty, even if the redemption amounts are non-zero. This limits the flexibility of the custom redemption feature and may cause inconvenience for users who want to redeem their RTokens without specifying the expected output tokens.

The issue arises in the following code block in RToken.sol:320-334

bool allZero = true;
for (uint256 i = 0; i < erc20s.length; ++i) {
    if (amounts[i] == 0) continue; // unregistered ERC20s will have 0 amount
    if (allZero) allZero = false;
    // ...
}
if (allZero) revert("empty redemption");

The code checks if all the redemption amounts are zero and reverts with "empty redemption" if that's the case. However, when expectedERC20sOut is empty, the loop that checks the post-balances of the expected output tokens is skipped: RToken.sol:339-343

for (uint256 i = 0; i < expectedERC20sOut.length; ++i) {
    uint256 bal = IERC20(expectedERC20sOut[i]).balanceOf(recipient);
    require(bal - pastBals[i] >= minAmounts[i], "redemption below minimum");
}

As a result, the redeemCustom() function reverts with "empty redemption" even when the preconditions for a valid redemption are met.

Impact

Users are unable to perform custom redemptions when they don't specify any expected output tokens, even if the redemption amounts are non-zero.
The flexibility of the custom redemption feature is limited, as users are forced to provide at least one expected output token, even if they don't have any specific requirements.
Users may experience unexpected reverts when attempting to redeem their RTokens using the redeemCustom() function with an empty expectedERC20sOut array.

Proof of Concept

Here is how.

Alice holds a balance of 100 RTokens.
Alice wants to redeem 50 RTokens for a custom basket of underlying assets.
Alice calls the redeemCustom() function with the following parameters:
- recipient: Alice's address
- amount: 50
- basketNonces: [1, 2]
- portions: [500000000000000000, 500000000000000000] (50% for each basket)
- expectedERC20sOut: []
- minAmounts: []
Despite meeting the preconditions for a valid redemption, the redeemCustom() function reverts with "empty redemption" because expectedERC20sOut is empty.

Tools Used

Manual review

Recommended Mitigation Steps

To fix the issue and allow custom redemptions with an empty expectedERC20sOut array

// ...

bool allZero = true;
for (uint256 i = 0; i < erc20s.length; ++i) {
    if (amounts[i] == 0) continue; // unregistered ERC20s will have 0 amount
    if (allZero) allZero = false;
    // ...
}
- if (allZero) revert("empty redemption");
+ if (allZero && expectedERC20sOut.length > 0) revert("empty redemption");

// ...

for (uint256 i = 0; i < expectedERC20sOut.length; ++i) {
    uint256 bal = IERC20(expectedERC20sOut[i]).balanceOf(recipient);
    require(bal - pastBals[i] >= minAmounts[i], "redemption below minimum");
}

With these changes, the "empty redemption" revert will only occur if allZero is true and expectedERC20sOut is not empty. This allows custom redemptions to proceed when expectedERC20sOut is empty, as long as the redemption amounts are non-zero and other preconditions are met.

Assessed type

Error

code-423n4 / 2024-07-reserve-validation

Improper Handling of Empty `expectedERC20sOut` Array in `redeemCustom()` #91