Maha's Core - Maha

Prepared by:

HALBORN

Last Updated 08/19/2024

Date of Engagement by: July 22nd, 2024 - July 26th, 2024

Summary

100% of all REPORTED Findings have been addressed

All findings

Critical

High

Medium

Low

Informational

1. Introduction
2. Assessment summary
3. Test approach and methodology
4. Risk methodology
5. Scope
6. Assessment summary & findings overview
7. Findings & Tech Details

7.1 Use of constant value to absorb rounding errors
7.2 Lack of zero address checks
7.3 Unused function arguments
7.4 Redundant check in balance and debt verification

8. Automated Testing

1. Introduction

Maha engaged Halborn to conduct a security assessment on their smart contracts beginning on July 22nd and ending on July 26th. The security assessment was scoped to the smart contracts provided in the GitHub repository [mahaxyz](https://github.com/mahaxyz/), commit hashes, and further details can be found in the Scope section of this report.

The scope included in this assessment includes the core of the MAHA protocol which is focused on the creation of ZAI token USDz, a stable coin with the following characteristics:

Fully pegged to USD fiat by minting 1:1 to already pegged USDC token, used as collateral, and assuring peg with a custom Peg Stability Module.
USDz is a LayerZero's OFT, which means that it will be able to be sent (minted in)to all blockchains supported by LayerZero.
ZAI can be staked in a dedicated Morpho Blue trustless lending market.

2. Assessment Summary

The team at Halborn was provided 1 week for the engagement and assigned one full-time security engineer to check the security of the smart contract. The security engineer is a blockchain and smart-contract security experts with advanced penetration testing, smart-contract hacking, and deep knowledge of multiple blockchain protocols.

The purpose of this assessment is to:

Ensure that smart contract functions operate as intended.
Identify potential security issues with the smart contracts.

3. Test Approach and Methodology

Halborn performed a combination of manual review of the code and automated security testing to balance efficiency, timeliness, practicality, and accuracy in regard to the scope of the smart contract assessment. While manual testing is recommended to uncover flaws in logic, process, and implementation; automated testing techniques help enhance coverage of smart contracts and can quickly identify items that do not follow security best practices.

The following phases and associated tools were used throughout the term of the assessment:

Research into the architecture, purpose, and use of the platform.
Smart contract manual code review and walkthrough to identify any logic issue.
Thorough assessment of safety and usage of critical Solidity variables and functions in scope that could led to arithmetic related vulnerabilities.
Manual testing by custom scripts.
Graphing out functionality and contract logic/connectivity/functions (`solgraph`).
Static Analysis of security for scoped contract, and imported functions. (`Slither`).

4. RISK METHODOLOGY

Every vulnerability and issue observed by Halborn is ranked based on two sets of Metrics and a Severity Coefficient. This system is inspired by the industry standard Common Vulnerability Scoring System.

The two Metric sets are: Exploitability and Impact. Exploitability captures the ease and technical means by which vulnerabilities can be exploited and Impact describes the consequences of a successful exploit.

The Severity Coefficients is designed to further refine the accuracy of the ranking with two factors: Reversibility and Scope. These capture the impact of the vulnerability on the environment as well as the number of users and smart contracts affected.

The final score is a value between 0-10 rounded up to 1 decimal place and 10 corresponding to the highest security risk. This provides an objective and accurate rating of the severity of security vulnerabilities in smart contracts.

The system is designed to assist in identifying and prioritizing vulnerabilities based on their level of risk to address the most critical issues in a timely manner.

4.1 EXPLOITABILITY

Attack Origin (AO):

Captures whether the attack requires compromising a specific account.

Attack Cost (AC):

Captures the cost of exploiting the vulnerability incurred by the attacker relative to sending a single transaction on the relevant blockchain. Includes but is not limited to financial and computational cost.

Attack Complexity (AX):

Describes the conditions beyond the attacker’s control that must exist in order to exploit the vulnerability. Includes but is not limited to macro situation, available third-party liquidity and regulatory challenges.

Metrics:

EXPLOITABILIY METRIC ( $m_e$ )	METRIC VALUE	NUMERICAL VALUE
Attack Origin (AO)	Arbitrary (AO:A) Specific (AO:S)	1 0.2
Attack Cost (AC)	Low (AC:L) Medium (AC:M) High (AC:H)	1 0.67 0.33
Attack Complexity (AX)	Low (AX:L) Medium (AX:M) High (AX:H)	1 0.67 0.33

Exploitability

E

is calculated using the following formula:

$E = \prod m_e$

4.2 IMPACT

Confidentiality (C):

Measures the impact to the confidentiality of the information resources managed by the contract due to a successfully exploited vulnerability. Confidentiality refers to limiting access to authorized users only.

Integrity (I):

Measures the impact to integrity of a successfully exploited vulnerability. Integrity refers to the trustworthiness and veracity of data stored and/or processed on-chain. Integrity impact directly affecting Deposit or Yield records is excluded.

Availability (A):

Measures the impact to the availability of the impacted component resulting from a successfully exploited vulnerability. This metric refers to smart contract features and functionality, not state. Availability impact directly affecting Deposit or Yield is excluded.

Deposit (D):

Measures the impact to the deposits made to the contract by either users or owners.

Yield (Y):

Measures the impact to the yield generated by the contract for either users or owners.

Metrics:

IMPACT METRIC ( $m_I$ )	METRIC VALUE	NUMERICAL VALUE
Confidentiality (C)	None (I:N) Low (I:L) Medium (I:M) High (I:H) Critical (I:C)	0 0.25 0.5 0.75 1
Integrity (I)	None (I:N) Low (I:L) Medium (I:M) High (I:H) Critical (I:C)	0 0.25 0.5 0.75 1
Availability (A)	None (A:N) Low (A:L) Medium (A:M) High (A:H) Critical (A:C)	0 0.25 0.5 0.75 1
Deposit (D)	None (D:N) Low (D:L) Medium (D:M) High (D:H) Critical (D:C)	0 0.25 0.5 0.75 1
Yield (Y)	None (Y:N) Low (Y:L) Medium (Y:M) High (Y:H) Critical (Y:C)	0 0.25 0.5 0.75 1

Impact

I

is calculated using the following formula:

$I = max(m_I) + \frac{\sum{m_I} - max(m_I)}{4}$

4.3 SEVERITY COEFFICIENT

Reversibility (R):

Describes the share of the exploited vulnerability effects that can be reversed. For upgradeable contracts, assume the contract private key is available.

Scope (S):

Captures whether a vulnerability in one vulnerable contract impacts resources in other contracts.

Metrics:

SEVERITY COEFFICIENT ( $C$ )	COEFFICIENT VALUE	NUMERICAL VALUE
Reversibility ( $r$ )	None (R:N) Partial (R:P) Full (R:F)	1 0.5 0.25
Scope ( $s$ )	Changed (S:C) Unchanged (S:U)	1.25 1

Severity Coefficient

C

is obtained by the following product:

$C = rs$

The Vulnerability Severity Score

S

is obtained by:

$S = min(10, EIC * 10)$

The score is rounded up to 1 decimal places.

Severity	Score Value Range
Critical	9 - 10
High	7 - 8.9
Medium	4.5 - 6.9
Low	2 - 4.4
Informational	0 - 1.9

5. SCOPE

Files and Repository

(a) Repository: mahaxyz

(b) Assessed Commit ID: f87db9e

contracts/core/ZaiStablecoin.sol
contracts/core/direct-deposit/Constants.sol
contracts/core/direct-deposit/DDHub.sol

↓ Expand ↓

Out-of-Scope: Third party dependencies, Economic attacks

Remediation Commit ID:

Out-of-Scope: New features/implementations after the remediation commit IDs.

6. Assessment Summary & Findings Overview

Critical

High

Medium

Low

Informational

Security analysis	Risk level	Remediation Date
Use of Constant Value to Absorb Rounding Errors	Low	Solved - 07/29/2024
Lack of zero address checks	Informational	Acknowledged
Unused Function Arguments	Informational	Solved - 07/29/2024
Redundant Check in Balance and Debt Verification	Informational	Acknowledged

7. Findings & Tech Details

7.1 Use of Constant Value to Absorb Rounding Errors

// Low

Description

Utilizing the constant WAD (10^18) to absorb rounding errors is inappropriate for tokens like USDC, which operate with 6 decimal places (10^6). Applying WAD to USDC can lead to significant inaccuracies and out-of-range errors, as the precision mismatch can result in values that exceed the token’s operational limits.

    // It's adding up `WAD` due possible rounding errors
    if (!info.isLive || !info.plan.active() || currentAssets + Constants.WAD < info.debt) {
      toWithdraw = maxWithdraw;
    } else {
      uint256 maxDebt = info.debtCeiling; //vat.Line();
      uint256 debt = info.debt;
...

Therefore, when working with USDC, it's being created a range to absorb rounding errors of 10^12 USDC, which is undoubtedly an exaggerated range.

BVSS

AO:A/AC:L/AX:L/R:N/S:U/C:N/A:L/I:L/D:N/Y:N (3.1)

Recommendation

Creating/using a dynamic value to fit better the "rounding error" range is recommendable. This can be easily achievable by calling token.decimals() or storing this value in the pool info.

Remediation Plan

SOLVED: The Maha team removed completely this part of the conditional to focus on the contract being checked as active and live.

Remediation Hash

https://github.com/mahaxyz/contracts/commit/d915da1ca7d17f6c8b996e6917a2f43ea61061fa

7.2 Lack of zero address checks

// Informational

Description

The initialize function in the PegStabilityModule lacks validation checks for zero addresses, potentially leading to critical issues. Initializing contracts with zero addresses can result in unexpected behavior or security vulnerabilities, as zero addresses may represent invalid or unintentional destinations. Implementing checks to ensure addresses are not zero is essential to maintain contract integrity, prevent errors, and enhance overall security.

Besides, there are no zero checks in the following functions either:

mint
redeem
updateFeeDestination

Regarding the contract DDHub.sol:

initialize
setFeeCollector

BVSS

AO:A/AC:L/AX:L/C:N/I:N/A:H/D:N/Y:N/R:F/S:U (1.9)

Recommendation

Consider including pertinent address checks.

Remediation Plan

ACKNOWLEDGED: The Maha team acknowledged this issue.

7.3 Unused Function Arguments

// Informational

Description

In the DDOperatorPlan contract we find that getTargetAssets has a not used argument.

  function getTargetAssets(uint256) external view override returns (uint256) {
    if (enabled == 0) return 0;
    return targetAssets;
  }

Besides, there's a call in contract DDHUB.sol that can be cleaned too:

      uint256 targetAssets = info.plan.getTargetAssets(currentAssets);

Score

AO:S/AC:L/AX:L/C:N/I:N/A:N/D:N/Y:N/R:N/S:U (0.0)

Recommendation

Unused arguments should be cleaned up from the code if they have no purpose. Clearing these arguments will increase the readability of the code.

Remediation Plan

SOLVED: The Maha team decided to maintain this unused variable, as it will be used in future improvements of the protocol.

Remediation Hash

https://github.com/mahaxyz/contracts/commit/e2aeb4739e246237d9c440d11cf1ae86ec16434a

7.4 Redundant Check in Balance and Debt Verification

// Informational

Description

The provided code contains a redundant check that can be streamlined for efficiency. The require statement verifies that the balance plus 1 wei is greater than or equal to the debt, followed by an if statement that returns if the balance is less than or equal to the debt. The require statement makes the subsequent if check unnecessary because if the condition in require fails, the function execution is halted.

require(balanceBefore + 1 wei >= info.debt, "invaraint balance >= debt");

// calculate fees
if (balanceBefore <= info.debt) return;

Score

AO:A/AC:L/AX:H/C:N/I:N/A:N/D:N/Y:N/R:N/S:U (0.0)

Recommendation

The require statement can be refined to remove redundancy, and the if check can be eliminated.

require(balanceBefore > info.debt, "invariant balance > debt");

Remediation Plan

ACKNOWLEDGED: The Maha team acknowledged this issue.

8. Automated Testing

Description

Halborn used automated testing techniques to enhance the coverage of certain areas of the scoped contracts. Among the tools used was Slither, a Solidity static analysis framework. After Halborn verified all the contracts in the repository and was able to compile them correctly into their abi and binary formats, Slither was run on the all-scoped contracts. This tool can statically verify mathematical relationships between Solidity variables to detect invalid or inconsistent usage of the contracts' APIs across the entire code-base.

Slither results

ERC20 Specific

As USDz inherits ERC20permit, approvals aren't expected to be used, otherwise "ERC20 appoval race condition" should be taken into account.

Core analysis

The reentrancy instances flagged by Slither were checked individually, and have been categorised as false positives. The ones that may be vulnerable are all protected with the nonReentrant modifier.

Halborn strongly recommends conducting a follow-up assessment of the project either within six months or immediately following any material changes to the codebase, whichever comes first. This approach is crucial for maintaining the project’s integrity and addressing potential vulnerabilities introduced by code modifications.

1. Introduction
2. Assessment summary
3. Test approach and methodology
4. Risk methodology
5. Scope
6. Assessment summary & findings overview
7. Findings & Tech Details

Maha's Core

Maha

Table of Contents

1. Introduction

2. Assessment Summary

3. Test Approach and Methodology

4. RISK METHODOLOGY

4.1 EXPLOITABILITY

Attack Origin (AO):

Attack Cost (AC):

Attack Complexity (AX):

Metrics:

4.2 IMPACT

Confidentiality (C):

Integrity (I):

Availability (A):

Deposit (D):

Yield (Y):

Metrics:

4.3 SEVERITY COEFFICIENT

Reversibility (R):

Scope (S):

Metrics:

5. SCOPE

6. Assessment Summary & Findings Overview

7. Findings & Tech Details

7.1 Use of Constant Value to Absorb Rounding Errors

Description

BVSS

Recommendation

Remediation Plan

Remediation Hash

7.2 Lack of zero address checks

Description

BVSS

Recommendation

Remediation Plan

7.3 Unused Function Arguments

Description

Score

Recommendation

Remediation Plan

Remediation Hash

7.4 Redundant Check in Balance and Debt Verification

Description

Score

Recommendation

Remediation Plan

8. Automated Testing

Description

Slither results

ERC20 Specific

Core analysis

Table of Contents