Submitted by guhu95, also found by cu5t0mpeo, bill, t0x1c, 0xCiphky, gjaldon (1, 2), 0xabhay (1, 2), WildSniper (1, 2, 3), 0rpse, GoatedAudits (1, 2, 3), honey-k12 (1, 2), Bauchibred (1, 2), jokr, blutorque (1, 2), Tendency (1, 2), crypticdefense (1, 2), Fassi_Security (1, 2), SBSecurity (1, 2, 3), peanuts (1, 2), tapir (1, 2, 3), MSaptarshi, kennedy1030 (1, 2), OMEN, LessDupes (1, 2), 0x007, ilchovski, zzykxx (1, 2, 3), gumgumzum, stonejiajia, Audinarey, RamenPeople, Ocean_Sky, 0x73696d616f, underdog, josephdara, p0wd3r, aslanbek, d3e4, KupiaSec, grearlake (1, 2), and GalloDaSballo
Deposit and withdrawal requests can be done immediately with no costs or fees, and both use the current oracle prices and TVL calculation (deposit, and withdraw). Crucially, the withdrawal amount is calculated at withdrawal request submission time instead of at withdrawal claim time. Any small change in either ezETH value or in the price of a collateral token can be exploited at no cost by MEV. Specifically, if the price increases, a deposit is made before the increase, and a withdrawal request immediately after.
Additionally, in case of a supported LSTs sudden change in price (for example, due to price manipulation, an exploit of that LST, due to consensus layer penalties (slashing), or liquidity issues), external holders of that LST may frontrun the change, deposit the LST into Renzo, and immediately request a withdrawal of another asset (e.g., native ETH). In such situations, Renzo functions as a zero-slippage zero-fees oracle-price-based DEX for LSTs and ETH up to the TVL cap for the affected LST. Zero-slippage zero-fee oracle-price-based designs are notoriously vulnerable to both oracle manipulation and oracle latency attacks if not carefully prevented.
The newly introduced frontrunning vector, due to incurring only gas fees, and no fee that is proportional to the size of the trade, allows profitably exploiting most TVL and oracle price changes, and exploiting previously exploitable updates (via Balancers usage of getRate()) and even more profitably via the new vector.
The impact is that value, that otherwise should be distributed to ezETH holders, is constantly lost to MEV.
Additionally, ezETH holders lose value due to facilitating asset swaps with no slippage and no fees based on outdated oracle prices.
Scenario 1 (MEV, price increase):
Scenario 2 (malicious):
Scenario 3 (MEV, price decrease, zero-slippage zero-fees DEX):
The redemption conversion should be performed at both request and claim time. If it results in a lower redeem value, that value should be used for the claim instead of the initial redeem amount. Additionally, a rate limit or a short delay on deposits with similar protection can be added as well.
MEV
alcueca (judge) commented:
jatinj615 (Renzo) confirmed
Renzo mitigated:
Status: Mitigation confirmed. Full details in reports from 0xCiphky, grearlake, and Bauchibred.
