Submitted by 0xCiphky, also found by Takarez, lanrebayode77, and KupiaSec
Stakers can provide liquidity by choosing an operator and vault to deposit their assets with. In return, they receive shares based on their deposited amount relative to the total assets in the vault.
DSSs have the right to slash vaults if it feels that an operator has failed to perform its tasks adequately. DSSs are subjected to a delay of 2 days (represented by VETO_WINDOW) before a slashing can be finalized. This allows the slashing committee to veto a slashing event if it feels that the slashing was unfair.
The handleSlashing function transfers the slashed assets from the vault, effectively reducing the total assets in the vault, which slashes each shareholder relative to the number of shares they own.
The problem with the current system is that the two-day veto window introduces a time gap between when a slash is confirmed and when it is finalized. The slash request records the amount that should be slashed depending on the slash percentage and total assets in the fetchEarmarkedStakes function. Therefore, it is fair to assume that the shareholders at that timestamp should be slashed. However, currently, users who deposit between the slash request and when it is executed will also be slashed and lose value.
Furthermore, the protocol currently lacks any getter methods to warn users of pending slashes for vaults, meaning users could unknowingly deposit into such vaults and lose value in a short period.
In the worst-case scenario, if a vault is fully slashed and the total assets become zero, since the total supply will still be non-zero and previous users will still own shares, any new deposits will instantly lose value, and some funds will be incorrectly allocated to previous users.
The current implementation can lead to unfair slashing of users who deposit between the slashing request and its finalization. Users unknowingly depositing into vaults with pending slashes will lose value. With no getter methods available, there is no way for users to identify such vaults and avoid potential losses.
devdks25 (Karak) commented:
dewpe (Karak) commented:
dewpe (Karak) disputed
MiloTruck (judge) commented:
devdks25 (Karak) commented:
Karak mitigated:
Status: Mitigation confirmed. Full details in reports from 0xCiphky, KupiaSec and sl1.
