carrotsmuggler - Topics wont activate even with a sufficient stake

[sherlock-admin2]

carrotsmuggler

Medium

Topics wont activate even with a sufficient stake

Summary

Topics wont activate even with a sufficient stake

Vulnerability Detail

The AddStake function is used to add stake to a topic. If the stake amount reaches a certain threshold, the topic gets activated.

err = activateTopicIfWeightAtLeastGlobalMin(ctx, ms, msg.TopicId, msg.Amount)

This function however uses the GetCurrentTopicWeight function to get the current topic weight. This is calculated with an EMA filter, so the current deposit does not have the full weight. The result is a weighted average of the last topic weight and the current weight including the fresh stake.

weight, err = alloraMath.CalcEma(topicRewardAlpha, targetWeight, previousTopicWeight, noPrior)

The topic is only activated if this new weight is higher than the setting in the params.

if newTopicWeight.Gte(params.MinTopicWeight) {
    err = ms.k.ActivateTopic(ctx, topicId)
    if err != nil {
        return err
    }
}

So due to the topic using an EMA filter, even if the actual weight of the topic exceeds the threshold, the topic wont get activated since the EMA value will still be below threshold.

At the end of the block, the EMA weights are updated in the EndBlocker function.

weights, sumWeight, totalRevenue, err := rewards.GetAndUpdateActiveTopicWeights(sdkCtx, am.keeper, blockHeight)

This is where the weights are updated, and after a few blocks the EMA will rise enough to clear the threshold.

However, while the EndBlocker function has the functionality to de-activate topics if their weight is below the threshold, it does not have the functionality to activate topics which cross the threshold.

The scenario looks like the following:

Assume the current stake is 0. Alice stakes 100 tokens. The threshold is 0.5. alpha for EMA is 0.8.

1. In block 1, Alice deposits 100 tokens. Current weight is = 0x0.5 + 100x0.5 = 50. Since this is below threshold, the ActivateTopic function never gets called.
2. Block 2, EMA = 50x0.5 + 100x0.5 = 75.
3. Block 3, EMA = 75x0.5 + 100x0.5 = 87.5. Now the threshold is cleared. However, the endblocker has no functionality to activate the topic.

Thus Alice deposits the necessary tokens but the topic never gets activated.

Impact

Topic does not get activated immediately on stake deposit due to EMA not clearing the threshold. Since the EndBlocker funciton due to turn on topics automatically, the topic will stay deactivated even though its weight is below the threshold.

Code Snippet

https://github.com/sherlock-audit/2024-06-allora/blob/main/allora-chain/x/emissions/module/rewards/topic_rewards.go#L165-L173

Tool used

Manual Review

Recommendation

Consider enabling topics the moment their weight goes above the threshold instead of using an EMA.

If EMA is still desirable, then consider creating a delayed queue for topics which clear the raw weight but not the EMA weight and process them in the Endblocker and activate them once its EMA weight is above the threshold.

[relyt29]

The bug is correct, I think the reason why it hasn't yet been an issue because alpha (for the EMA) was sufficiently small that the previous value being zero or uninitialized was still enough for the topic to fire

so it's not that topics won't ever activate, but there should certainly be corner cases e.g. if you only put up the absolute minimum for the topic, where it won't activate

either way the bug is right and we should fix this thank you for your report

[sherlock-admin2]

The protocol team fixed this issue in the following PRs/commits: https://github.com/allora-network/allora-chain/pull/542