Yuki - SetToken can't be unlocked early.

[sherlock-admin2]

Yuki

high

SetToken can't be unlocked early.

Summary

SetToken can't be unlocked early

Vulnerability Detail

The function unlock() is used to unlock the setToken after rebalancing, as how it is right now there are two ways to unlock the setToken.

• can be unlocked once the rebalance duration has elapsed

• can be unlocked early if all targets are met, there is excess or at-target quote asset, and raiseTargetPercentage is zero

  function unlock(ISetToken _setToken) external {
      bool isRebalanceDurationElapsed = _isRebalanceDurationElapsed(_setToken);
      bool canUnlockEarly = _canUnlockEarly(_setToken);
  
      // Ensure that either the rebalance duration has elapsed or the conditions for early unlock are met
      require(isRebalanceDurationElapsed || canUnlockEarly, "Cannot unlock early unless all targets are met and raiseTargetPercentage is zero");
  
      // If unlocking early, update the state
      if (canUnlockEarly) {
          delete rebalanceInfo[_setToken].rebalanceDuration;
          emit LockedRebalanceEndedEarly(_setToken);
      }
  
      // Unlock the SetToken
      _setToken.unlock();
  }

  function _canUnlockEarly(ISetToken _setToken) internal view returns (bool) {
      RebalanceInfo storage rebalance = rebalanceInfo[_setToken];
      return _allTargetsMet(_setToken) && _isQuoteAssetExcessOrAtTarget(_setToken) && rebalance.raiseTargetPercentage == 0;
  }

The main problem occurs as the value of raiseTargetPercentage isn't reset after rebalancing. The other thing is that the function setRaiseTargetPercentage can't be used to fix this issue as it doesn't allow giving raiseTargetPercentage a zero value.

A setToken can use the AuctionModule to rebalance multiple times, duo to the fact that raiseTargetPercentage value isn't reset after every rebalancing. Once changed with the help of the function setRaiseTargetPercentage this value will only be non zero for every next rebalancing. A setToken can be unlocked early only if all other requirements are met and the raiseTargetPercentage equals zero.

This problem prevents for a setToken to be unlocked early on the next rebalances, once the value of the variable raiseTargetPercentage is set to non zero.

On every rebalance a manager should be able to keep the value of raiseTargetPercentage to zero (so the setToken can be unlocked early), or increase it at any time with the function setRaiseTargetPercentage.

    function setRaiseTargetPercentage(
        ISetToken _setToken,
        uint256 _raiseTargetPercentage
    )
        external
        onlyManagerAndValidSet(_setToken)
    {
        // Ensure the raise target percentage is greater than 0
        require(_raiseTargetPercentage > 0, "Target percentage must be greater than 0");

        // Update the raise target percentage in the RebalanceInfo struct
        rebalanceInfo[_setToken].raiseTargetPercentage = _raiseTargetPercentage;

        // Emit an event to log the updated raise target percentage
        emit RaiseTargetPercentageUpdated(_setToken, _raiseTargetPercentage);
    }

Impact

Once the value of raiseTargetPercentage is set to non zero, every next rebalancing of the setToken won't be eligible for unlocking early. As the value of raiseTargetPercentage isn't reset after every rebalance and neither the manager can set it back to zero with the function setRaiseTargetPercentage().

Code Snippet

https://github.com/sherlock-audit/2023-06-Index/blob/main/index-protocol/contracts/protocol/modules/v1/AuctionRebalanceModuleV1.sol#L389

Tool used

Manual Review

Recommendation

Recommend to reset the value raiseTargetPercentage after every rebalancing.

    function unlock(ISetToken _setToken) external {
        bool isRebalanceDurationElapsed = _isRebalanceDurationElapsed(_setToken);
        bool canUnlockEarly = _canUnlockEarly(_setToken);

        // Ensure that either the rebalance duration has elapsed or the conditions for early unlock are met
        require(isRebalanceDurationElapsed || canUnlockEarly, "Cannot unlock early unless all targets are met and raiseTargetPercentage is zero");

        // If unlocking early, update the state
        if (canUnlockEarly) {
            delete rebalanceInfo[_setToken].rebalanceDuration;
            emit LockedRebalanceEndedEarly(_setToken);
        }

+       rebalanceInfo[_setToken].raiseTargetPercentage = 0;

        // Unlock the SetToken
        _setToken.unlock();
    }

[pblivin0x]

The risk here is a stale raiseTargetPercentage can lead to a SetToken that cannot be unlocked early?

Debating if we should include this or not.

[FlattestWhite]

Should raiseTargetPercentage be part of the check for unlocking early? I'm thinking it doesn't since that's only used when needing to raiseTargetAssets because we met all our targets and we have leftover WETH.

[pblivin0x]

since we can't set the raiseAssetTarget to zero, this is a valid issue. will fix

[snake-poison]

since we can't set the raiseAssetTarget to zero, this is a valid issue. will fix

Yea I agree with the assessment and looks like the fix is more or less clear.

[pblivin0x]

The remediation for this issue is open for review here https://github.com/IndexCoop/index-protocol/pull/25

The changes are to 1) Allow the raiseTargetPercentage to be set to 0: https://github.com/IndexCoop/index-protocol/blob/839a6c699cc9217c8ee9f3b67418c64e80f0e10d/contracts/protocol/modules/v1/AuctionRebalanceModuleV1.sol#L420-L439 2) Reset the raiseTargetPercentage on every unlock() call https://github.com/IndexCoop/index-protocol/blob/839a6c699cc9217c8ee9f3b67418c64e80f0e10d/contracts/protocol/modules/v1/AuctionRebalanceModuleV1.sol#L414

[IAm0x52]

Fix looks good. Manger can now set raiseTargetPercentage to 0 directly. Additionally it will also be set to zero when the auction unlocks.