Privileged Role Vulnerabilities in DineroERC20 Contract

[c4-bot-5]

Lines of code

https://github.com/redacted-cartel/pirex-eth-contracts/blob/bea04314fe0f06555f7c13f7f17c53da248c9204/src/DineroERC20.sol#L71 https://github.com/redacted-cartel/pirex-eth-contracts/blob/bea04314fe0f06555f7c13f7f17c53da248c9204/src/DineroERC20.sol#L55

Vulnerability details

Impact

This vulnerability allows unauthorized parties to arbitrarily mint or burn tokens, potentially leading to inflation, token supply manipulation, and disruption of protocol governance. The compromised roles can adversely affect the participating validators, update contract addresses, pause deposits, and cause unexpected protocol changes, risking user and protocol funds.

Proof of Concept

The DineroERC20 contract exhibits vulnerabilities related to the privileged roles MINTER_ROLE at function DineroERC20::mint and BURNER_ROLE at function DineroERC20::burn, which could lead to unauthorized minting or burning of tokens and potential manipulation of protocol governance. These roles lack sufficient safeguards, such as multisig or token-based governance, and do not enforce timelocks on critical operations.

@>    function mint(address _to, uint256 _amount) external onlyRole(MINTER_ROLE) {
        if (_to == address(0)) revert Errors.ZeroAddress();
        if (_amount == 0) revert Errors.ZeroAmount();

        _mint(_to, _amount);
    }

    function burn(
        address _from,
        uint256 _amount
@>    ) external onlyRole(BURNER_ROLE) {
        if (_from == address(0)) revert Errors.ZeroAddress();
        if (_amount == 0) revert Errors.ZeroAmount();

        _burn(_from, _amount);
    }
}

I discovered this issue in the DineroERC20 contract at the following lines:

• Line 55: MINTER_ROLE
• Line 71: BURNER_ROLE

Tools Used

Manual VScode review

Recommended Mitigation Steps with Fix Code

To mitigate these vulnerabilities, I recommend implementing the following steps:

1. Multisig or Token-Based Governance: Replace the direct assignment of roles with a multisignature scheme or token-based governance mechanism. Require multiple signatures or token holder votes to execute privileged functions, ensuring decentralized control and reducing the risk of unauthorized actions.

// Example implementation of multisig for minting role
function mint(address _to, uint256 _amount) external onlyMultisigOrGovernance {
    require(_to != address(0), "Invalid address");
    require(_amount > 0, "Invalid amount");

    _mint(_to, _amount);
}

// Example modifier for multisig or governance
modifier onlyMultisigOrGovernance() {
    require(multisigContract.isApproved(msg.sender) || governanceToken.hasVote(msg.sender), "Not authorized");
    _;
}

2. Timelocks: Implement timelocks for critical operations to introduce a delay before executing privileged functions. This allows stakeholders to review proposed changes and intervene if necessary, enhancing the protocol's security and resilience.

// Example implementation of timelock for burning function
function burnWithTimelock(address _from, uint256 _amount) external onlyRole(BURNER_ROLE) {
    require(_from != address(0), "Invalid address");
    require(_amount > 0, "Invalid amount");

    // Perform timelock check
    require(block.timestamp >= lastBurnRequestTime[_from] + burnTimelock, "Timelock not expired");

    _burn(_from, _amount);
}

By incorporating these mitigation steps, the DineroERC20 contract can enhance its security posture and mitigate the risks associated with privileged roles. Additionally, conducting thorough security audits and engaging with the community for feedback can further strengthen the protocol's resilience to potential vulnerabilities.

[c4-bot-1]

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