Submitted by prapandey031, also found by Agontuk, bumbleb33, Coldless, Daniel526, MrPotatoMagic, and TenderBeastJr
https://github.com/code-423n4/2024-12-lambowin/blob/main/src/VirtualToken.sol#L10
The VirtualToken.sol has a hardcoded decimal value of 18 even if the underlying token has a decimal value of 6 (for eg, USDC). This would not let the liquidity providers of the (vUSDC, USDC) uniswap v3 pool to get the correct metadata for their NFT liquidity position. 
Below is a step-by-step PoC to explain the issue in detail.
The VirtualToken.sol is an ERC-20 token contract that has hardcoded 18 decimals:
https://github.com/OpenZeppelin/openzeppelin-contracts/blob/cceac54953ccda8a9a028d0b9bf4378605fdf67e/contracts/token/ERC20/ERC20.sol#L78
Lets say vUSDC is the virtual token contract with the underlying token as USDC. USDC has 6 decimals.
Now, as per the protocol, there would be a (vUSDC, USDC) uniswap v3 pool with 1:1 peg so that users could make swap and liquidity providers could provide (vUSDC, USDC) liquidity to the v3 pool. 
Lets say a user X has provided liquidity to the (vUSDC, USDC) v3 pool. He would hold a liquidity position NFT:
https://github.com/Uniswap/v3-periphery/blob/main/contracts/NonfungiblePositionManager.sol#L128
The user X could do any transaction with this NFT as he would do with a normal NFT: transfer to someone else, sell on the Uniswap v3 NFT marketplace, etc.
However, when the marketplace would call tokenURI(uint256 tokenId) for Xs NFT metadata, wrong value of v3 pool price would be sent. Lets see the flow.
The intended v3 pool price should be near about 1 because of the peg. But when tokenURI(uint256 tokenId) is called:
https://github.com/Uniswap/v3-periphery/blob/main/contracts/NonfungiblePositionManager.sol#L189
It calls the tokenURI(INonfungiblePositionManager positionManager, uint256 tokenId) function in NonfungibleTokenPositionDescriptor.sol:
https://github.com/Uniswap/v3-periphery/blob/main/contracts/NonfungibleTokenPositionDescriptor.sol#L48
This calls the constructTokenURI(ConstructTokenURIParams memory params) function:
https://github.com/Uniswap/v3-periphery/blob/main/contracts/libraries/NFTDescriptor.sol#L44
This calls the generateName(ConstructTokenURIParams memory params, string memory feeTier) function:
https://github.com/Uniswap/v3-periphery/blob/main/contracts/libraries/NFTDescriptor.sol#L155
Ultimately, in the call-chain adjustForDecimalPrecision() function is called:
And the sqrtRatioX96 value (which would be around 1 as the USDC and vUSDC token amounts in the v3 pool are pegged) is adjusted with the decimal difference (which is 18-6=12 in this case); it would become either (10^12) or (1/(10^12)). 
Thus, X would have his liquidity position NFT with incorrect or unintended v3 pool price data; X would want the v3 pool price data to be 1 but it would be something else.
Impact: Correct NFT metadata is important for NFT marketplaces. Therefore the NFT functionality stands broken. The imapct is Medium.
Likelihood: The likelihood is High.
Therefore, the severity is Medium.
It is recommended to use the underlying tokens decimals in VirtualToken.sol.
For this audit, 9 reports were submitted by wardens detailing low risk and non-critical issues. The report highlighted below by Bauchibred received the top score from the judge.
The following wardens also submitted reports: gkrastenov, inh3l, K42, PolarizedLight, prapandey031, Rhaydden, Sparrow, and ZhengZuo999.
