Submitted by nirlin, also found by QiuhaoLi
https://github.com/code-423n4/2023-07-axelar/blob/2f9b234bb8222d5fbe934beafede56bfb4522641/contracts/its/token-manager/TokenManager.sol#L83-L173
https://github.com/code-423n4/2023-07-axelar/blob/2f9b234bb8222d5fbe934beafede56bfb4522641/contracts/its/interchain-token/InterchainToken.sol#L1-L106
A large token holder can send back and forth tokens using the flow limit to the capacity in the start of every epoch, making the system unusable for everyone else.
Interchain tokens can be transferred from one chain to another via the token manager and interchain token service. There is a limit imposed for both the flow out and flow in.
Flow out happens when you send the token from one chain to another. Lets say arbitrum to optimism and you are sending USDC. So in this case, in context of arbitrum, it will be flow out and in context of optimism. Then, it will be flow in and the receiver on optimism will get the tokens via the token manager giveToken() callable by the inter chain token service; however, there is a flow limit imposed per epoch.
One Epoch = 6 hours long.
So there cannot be more than a certain amount of tokens sent between the chain per 6 hours. This is done to protect from the uncertain conditions, like a security breach, and to secure as many of the tokens as possible. However, the problem with such a design, is a big token holder or whale could easily exploit it to DOS the other users.
Consider the following scenario:
This attack is pretty simple and easy to achieve and also very cheap to do; specifically, on the L2s or other cheap chains due to low gas prices.
The functions using the flow limit utility in tokenManager.sol are the following:
There could be many solutions for this. But two solutions are:
Chainlinks way would be the better solution to go with IMO.
DoS
deanamiel (Axelar) disagreed with severity and commented:
berndartmueller (judge) decreased severity to Medium and commented:
milapsheth (Axelar) commented:
