Submitted by shw
The LP pricing formula used in the burnAsset function of LimboDAO is vulnerable to flashloan manipulation. By swapping a large number of EYE into the underlying pool, an attacker can intentionally inflate the value of the LP tokens to get more fate than he is supposed to with a relatively low cost.
With the large portion of fate he gets, he has more voting power to influence the systems decisions, or even he can convert his fate to Flan tokens for a direct profit.
Below is an example of how the attack works:
The setEYEBasedAssetStake function has the same issue of using a manipulatable LP pricing formula. For more detailed explanations, please refer to the analysis of the Cheese Bank attack and the Warp Finance attack.
Referenced code:
DAO/LimboDAO.sol#L356
DAO/LimboDAO.sol#L392
Use a fair pricing formula for the LP tokens, for example, the one proposed by Alpha Finance.
gititGoro (Behodler) confirmed and commented:
Jack the Pug (judge) commented:
