Submitted by Jeiwan, also found by Toshii, immeas, and pcarranzav
In a case when gas fees are refunded for a token transfer made via the InterchainToken.interchainTransferFrom function, the fees will be refunded to the owner of the tokens, not the address that actually paid the fees. As a result, the sender will lose the fees paid for the cross-chain transaction and will not receive tokens on the other chain; the owner of the token will have their tokens and will receive the fees.
The InterchainToken.interchainTransferFrom function is used to transfer tokens cross-chain. The function is identical to the ERC20.transferFrom function: an approved address can send someone elses tokens to another chain. Since this is a cross-chain transaction, the sender also has to pay the additional gas fee for executing the transaction:
Notice that the gasService.payNativeGasForContractCall call in _callContract takes the refundTo address, i.e. the address that will receive refunded gas fee. If we return up on the call stack, well see that the refund address is the sender address thats passed to the tokenManager.transmitInterchainTransfer call. Thus, the gas fees will be refunded to the token owner, not the caller; however, its the caller who pays them.
The TokenManager.transmitInterchainTransfer and the InterchainTokenService.transmitSendToken functions, besides taking the sender/sourceAddress argument, need to also take the refund to address. In the InterchainToken.interchainTransferFrom function, the two arguments will be set to different addresses: the sender/sourceAddress argument will be set to the token owner address; the new refund to argument will be set to msg.sender. Thus, while tokens will be taken from their owner, the cross-chain gas fees will be refunded to the actual transaction sender.
ETH-Transfer
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