Submitted by minhtrng
An edge case in the TwabController._transferBalance can cause the total balance for a vault account to decrease; although, it did not actually decrease. This will cause the sum of the individual delegateBalances for a vault to be greater than the registered total for that vault. This again will skew the odds in favor of winning a price, causing the reserve to be drained faster over the time intended.
The TwabController._transferBalance function handles the case incorrectly, where _to is equal to the SPONSORSHIP_ADDRESS. First, assume the _from address is an address that has a balance and delegates to itself (the default). Then, the function will decrease the balance and delegateBalance of _from. It will also decrease the total balances of the vault account (note: that _toDelegate will be SPONSORSHIP_ADDRESS due to default):
Then, the balance and delegateBalance of SPONSORSHIP_ADDRESS will be increased by the same amount. This is not supposed to happen in the first place, as this address is not meant to have any balances. However, the issue described is due to the fact that the total balances of the vault account will not be adjusted, because the condition _toDelegate != SPONSORSHIP_ADDRESS is not met:
The ratio of _userTwab and _vaultTwabTotalSupply plays a role when determining a winner in TierCalculationLib.isWinner and the underlying model assumes the invariant to hold true:
If the sum of the individual twabs is higher than the sum, there will be more winners than intended, causing the described drainage of the reserve.
Disallow _to to be SPONSORSHIP_ADDRESS.
Invalid Validation
asselstine (PoolTogether) confirmed
PoolTogether mitigated:
Status: Mitigation confirmed. Full details in reports from 0xStalin, dirk_y and rvierdiiev.
