0x3b - coefficients math mistakenly calculates the coefficient diff with the same value

[sherlock-admin3]

0x3b

High

coefficients math mistakenly calculates the coefficient diff with the same value

Summary

GetAllReputersOutput, calculates each reputer scores and coefficients, however while doing that calculation it mistakenly calculated the coeff diff between the new and old coefficients using the same old value, meaning that the diff will be always 0.

458:    copy(oldCoefficients, coefficients)

...

548:   coeffDiff, err := coefficients[l].Sub(oldCoefficients[l])

Vulnerability Detail

When calculating the coefficient GetAllReputersOutput has a custom if where if listenedStakeFraction < minStakeFraction it will do some math and increase the coefficients by coefDiffTimesListenedDiffOverStakedFracDiff.

https://github.com/sherlock-audit/2024-06-allora/blob/main/allora-chain/x/emissions/module/rewards/rewards_internal.go#L563-L574

    coeffDiffTimesListenedDiff, err := coeffDiff.Mul(listenedDiff)
    if err != nil {
        return nil, nil, err
    }

    coefDiffTimesListenedDiffOverStakedFracDiff, err := coeffDiffTimesListenedDiff.Quo(stakedFracDiff)
    if err != nil {
        return nil, nil, err
    }

    coefficients[l], err = oldCoefficients[l].Add(coefDiffTimesListenedDiffOverStakedFracDiff)
    if err != nil {
        return nil, nil, err
    }

However that will never happen as before that when we calculate the coeffDiff between our new and old coefficients, we use 2 different arrays, but they are copied with the same parameters - our old coeff. Essentially calculating the coeffDiff between our old and old coefficient, resulting in 0 diff 100% of the time.

It will make coeffDiffTimesListenedDiff == 0 and coefDiffTimesListenedDiffOverStakedFracDiff == 0, making our coefficient == oldCoefficients.

This can be seen here where we calculate our diff: https://github.com/sherlock-audit/2024-06-allora/blob/main/allora-chain/x/emissions/module/rewards/rewards_internal.go#L548-L551

    //@audit calculate 0 diff as `coefficients[l] == oldCoefficients[l]`
    coeffDiff, err := coefficients[l].Sub(oldCoefficients[l])
    if err != nil {
        return nil, nil, err
    }

And in here where we set the coefficients and oldCoefficients arrays:

https://github.com/sherlock-audit/2024-06-allora/blob/main/allora-chain/x/emissions/module/rewards/rewards_internal.go#L448-L458

    coefficients := make([]alloraMath.Dec, len(initialCoefficients))
    copy(coefficients, initialCoefficients)

    oldCoefficients := make([]alloraMath.Dec, numReputers)
    var i uint64 = 0
    var maxGradient alloraMath.Dec = alloraMath.OneDec()

    // finalScores := make([]alloraMath.Dec, numReputers)
    newScores := make([]alloraMath.Dec, numReputers)

    for maxGradient.Gt(maxGradientThreshold) && i < gradientDescentMaxIters {
        // @audit copy `coefficients` into `oldCoefficients`, making them ==
        copy(oldCoefficients, coefficients)

Impact

The custom math for adjusting coeff when listenedStakeFraction < minStakeFraction won't actually change anything, as it will set the coeff to it's old value. This is dangerous as our new coeff could have been way smaller or bigger than our old one. This change will impact reputer rewards, as they are calculated based on scores, and score math includes coefficients.

Code Snippet

458:    copy(oldCoefficients, coefficients)

...

548:   coeffDiff, err := coefficients[l].Sub(oldCoefficients[l])

Tool used

Manual Review

Recommendation

Change the math to get the difference (preferably absolute -.abs()) between the new and old coefficients.

[sherlock-admin2]

1 comment(s) were left on this issue during the judging contest.

0xmystery commented:

coeffDiff is always zero

[sherlock-admin2]

The protocol team fixed this issue in the following PRs/commits: https://github.com/allora-network/allora-chain/pull/516