Submitted by RadiantLabs
Revenue produced by RTokens is sold for both RSR and RTokens according to a distribution defined in the Distributor. The BackingManager splits the collateral tokens to be sold proportionately to the RSR/RToken distribution ratio and sends them to the rsrTrader and rTokenTrader. When trades settle, the obtained RSR or RTokens are sent to the Distributor, which distributes them no longer according to the RSR/RToken ratio but to the different destinations for the specific token. The sum of all destinations for each token is used to derive the ratio.
The DAO fee is added to the RSR share of the initial split and paid when RSR is distributed.
However, the current implementation allows governance to manipulate the distribution settings without much effort in a way that can significantly reduce the amount of DAO fees paid.
This can be achieved through a combination of two different root causes:
Essentially, the distribution can be set in a way that temporarily accumulates RSR revenue in in the rsrTrader according to one RSR/RToken ratio, and then later redistributed with a different ratio.
RTokens can avoid paying most of the DAO fee
Assuming a 10% DAO fee, governance can execute the following steps to pay only about 1% in fees:
Disallowing RSR as a distribution token prevents this to a large extent.
cccz (judge) commented:
akshatmittal (Reserve) disputed and commented:
tbrent (Reserve) commented:
Reserve mitigated
Status: Mitigation confirmed. Full details in reports from Bauchibred, ether_sky and RadiantLabs.
