Submitted by ladboy233, also found by __141345__, R2, Kong, mahdikarimi, and Lambda
https://github.com/code-423n4/2022-11-paraspace/blob/c6820a279c64a299a783955749fdc977de8f0449/paraspace-core/contracts/misc/ParaSpaceOracle.sol#L131
https://github.com/code-423n4/2022-11-paraspace/blob/c6820a279c64a299a783955749fdc977de8f0449/paraspace-core/contracts/misc/ParaSpaceFallbackOracle.sol#L56
https://github.com/code-423n4/2022-11-paraspace/blob/c6820a279c64a299a783955749fdc977de8f0449/paraspace-core/contracts/misc/ParaSpaceFallbackOracle.sol#L78
Fallback oracle is using spot price in Uniswap liquidity pool, which is very vulnerable to flashloan price manipulation. Hacker can use flashloan to distort the price and overborrow or perform malicious liqudiation.
In the current implementation of the paraspace oracle, if the paraspace oracle has issue, the fallback oracle is used for ERC20 token.
which calls:
whch use the spot price from Uniswap V2.
and
Using flashloan to distort and manipulate the price is very damaging technique.
Consider the POC below.
We recommend the project does not use the spot price in Uniswap V2, if the paraspace is down, it is safe to just revert the transaction.
