Abhan1041 - Functionality of `stablecoinSwap` will not work when feeToken is origin token

[sherlock-admin3]

Abhan1041

High

Functionality of stablecoinSwap will not work when feeToken is origin token

Summary

• When feeToken is origin token, stablecoinSwap function will revert due to wrong origin amount transfer.

• For example, user wants to swap 100 USDC for 100 eUSD with stablecoinSwap function and feeToken is USDC.

• Now fees will be calculated from 100 USDC so lets suppose fees will be 5 USDC.

• So firstly, feeAmount will be transferFrom wallet to stablecoinFeeSafe (i.e. 5).

  ERC20PermitUpgradeable(ss.stablecoinFeeCurrency).safeTransferFrom(
              wallet,
              ss.stablecoinFeeSafe,
              ss.feeAmount
          );

• After that USDC will be transferFrom wallet to liquiditySafe (i.e. oAmount).

  ERC20PermitUpgradeable(ss.origin).safeTransferFrom(
              wallet,
              ss.liquiditySafe,
              ss.oAmount
          );

• In this case, oAmount is 100 but wallet has only 95 USDC (100 - 5 fees).

• Because of that this function will revert and user cannot do stablecoinSwap.

• Also, this will happen when defiToStablecoinSwap is used. For example - AAVE to USDC to eUSD (10-10-10) swap, first defi swap happens and wallet will get 10 USDC and now stablecoin swap of USDC-eUSD happens in which fee transfers first and then oAmount of 10 will transfer but actually wallet will have less USDC (10-fees) so it will revert.

Root Cause

• In stablecoinSwap, there is a transfer of origin token from wallet to liquiditySafe in which the amount will be oAmount but before that fees are transfered so wallet will have less balance.

https://github.com/sherlock-audit/2024-11-telcoin/blob/main/telcoin-audit/contracts/stablecoin/StablecoinHandler.sol#L163C7-L167C15

Internal pre-conditions

No response

External pre-conditions

No response

Attack Path

No response

Impact

• stablecoinSwap function will not work and always revert when feeToken is origin token.

PoC

No response

Mitigation

• Protocol should deduct feeAmount from oAmount while transfering origin token from wallet to liquiditySafe.