Origin Governance Audit

The Origin Protocol team asked us to review and audit their Origin governance system. We looked at the code and now publish our results.

Table of Contents

Summary

The OpenZeppelin team audited a governance system for OriginProtocol. The contracts allow users to stake their OGV tokens to receive voting power and be rewarded with additional OGV tokens.

Type

Governance

Timeline

From 2022-05-16

To 2022-05-20

Languages

Solidity

Total Issues

11 (8 resolved, 2 partially resolved)

Scope

We audited the OriginProtocol/ousd-governance repository at the 2b9761606d4ac4062b69367ebbad88220cea45ce commit.

In scope were the following contracts:

contracts/
├── Governance.sol
├── OgvStaking.sol
└── RewardsSource.sol

Out of Scope

All other files that are not specifically mentioned in scope were not audited. This is especially relevant for the RewardsSource contract that relies on the Governable contract, which implements the gatekeeping government mechanisms.

System Overview

The system enables users to participate in the governance of the Origin Protocol through staking their OGV tokens, allowing users to earn more OGV as a staking reward.

The staking contract OgvStaking allows OGV governance tokens to be staked to obtain non-transferable ERC20Votes-based tokens called OGVe which can participate in a GovernorBravo-compatible governance vote. The minimum and maximum lockup periods are 7 and 1461 days, respectively. In addition, each staker earns OGV tokens at a pre-configured daily total rate set per time interval and emitted from the RewardsSource contract.

The OGVe tokens are awarded based on a constant inflation factor of 80% per year in relation to the end of the staking lockup period. This mechanism is designed to limit the voting power of stakes which are no longer in lockup.

Security Considerations

• Due to an initial voting delay of 1 block in the governance contract, we assume a delay between the deployment of OgvStaking and the transfer of assets or privileges to Governance, such that there is at least sufficient time for stakers to have received and delegated their voting shares before the governance contract becomes active. Further, we assume a cancellation of all proposals in the timelock queue directly prior to the transfer of assets or privileges to Governance to prevent the execution of proposals which have been passed before completion of the voting shares distribution.
• Based on the disabled transfer functionality of OGVe and the minimum staking duration of 7 days for OGV, flash-loan based governance attacks are mitigated.
• Due to a lack of external calls outside of the contract ecosystem, the functions within OgvStaking appear inherently safe against reentrancy. However, the OGV token is based on an upgradable proxy. A future upgrade introducing transfer-hooks with user-controllable data could render the collectRewards function vulnerable to reentrancy.
• The PRBMathUD60x18 contract of the paulrberg/prb-math library is assumed to operate correctly if all operands and results can be expressed as a number with a 60 digit integer field and 18 digit fractional field.

Findings

Here we present our findings.

High Severity

Extending the staking duration discards rewards

In the OgvStaking contract, updating a user’s rewards is a two step process: First, the internal function _collectRewards must be called, which updates the accumulated per share rewards for all users and then computes and transfers an individual user’s total outstanding rewards. The computation of a user’s outstanding rewards uses the mapping rewardDebt for internal bookkeeping. Because rewardDebt contains a user’s debt in absolute terms, it can only be updated as a second step outside of the _collectRewards function after a potential change of the user’s stake has been accounted for. In effect, user rewards can only be computed correctly if a call to _collectRewards is jointly used with an update of rewardDebt.

The function extend only performs an update on rewardDebt without a prior call to _collectRewards. Hence, it always discards the rewards earned by a user instead of paying them out.

While calling _collectRewards within the extend function would mitigate the issue, consider instead solving the root cause by migrating to a mapping rewardDebtPerShare. This mapping can be updated within the _collectRewards function, which does not need to account for changes in the user’s balance, thereby avoiding any future mismatches in reward accounting.

Update: Fixed by the changes made in pull requests #88 and #98.

Strongly coupled contracts can break core functionality

The OgvStaking contract is strongly coupled with the RewardsSource contract:

• In OgvStaking the external functions stake, unstake and extend must call the internal function _collectRewards to update and transfer a user’s rewards.
• _collectRewards calls RewardsSource.collectRewards to update the accRewardPerShare variable and receive all rewards that accrued within RewardsSource since the last call to collectRewards.

In consequence, any issue within the rewards distribution of the RewardsSource.collectRewards function will escalate into the governance-related functions of the OgvStaking contract.

This issue is further amplified by misleading documentation in the RewardsSource.setRewardsTarget function, which contains the comment “Okay to be zero, just disables collecting rewards”. However, setting the rewardTarget to the zero address would cause any calls from OgvStaking to RewardsSource.collectRewards to revert, which will disable staking, thereby not allowing any new OGV holders to participate in governance.

Consider wrapping the external call to RewardsSource.collectReward into a try/catch block to achieve decoupling of reward mechanics and staking-based governance. Additionally, consider removing the noRewards parameter of the unstake function which was originally intended for emergency withdrawals.

Update: Fixed in pull request #97. In addition, consider catching the error reason and emitting it as an event parameter to allow detection of the otherwise silent error.

Medium Severity

Staking function can lead to loss of funds

In the OgvStaking contract the function stake allows anybody to stake OGV tokens for a certain duration. Typically, a user interacting with a staking function expects the supplied funds to be attributed to msg.sender. However, to deposit a stake on another user’s behalf a parameter address to is supplied to indicate the receiver of the stake. Further, the receiver is set to msg.sender if the zero address is provided.

If a user wants to simply stake for themselves, this leaves them with the option to call either stake(amount, duration, msg.sender) or stake(amount, duration, 0x0), both of which are surprising. Moreover, if the user wants to stake on behalf of another address, there are no checks to ensure the supplied account (which may be a contract) is able to call the unstake function or interact with OGV tokens. This behavior may lead to the loss of staked funds.

Consider migrating the staking logic to an internal function _stake and creating two external functions stake(uint256 amount, uint256 duration) and stakeFor(uint256 amount, uint256 duration, address receiver). Optionally, add the onlyGovernor modifier to the latter function to limit staking on behalf of another user to official airdrops. Further, consider verifying, either within the contract or off-chain, that a smart contract receiver can operate on the received stake to prevent an unintended loss of funds.

Update: Partially fixed in pull request #89. It is now simpler and more intuitive for a user to stake for themselves. However, staked funds may still be lost if a smart contract receiver is not designed to operate on the staked funds.

Lack of event emission

The following functions do not emit relevant events after executing sensitive actions:

• The setRewardsTarget function changes the address OGV tokens are minted to as part of the staking reward system.
• The setInflation function deletes and optionally updates the rewards slopes.

Consider emitting events after sensitive changes take place to facilitate tracking and notify off-chain clients following the contracts’ activity.

Update: Fixed in pull request #96. In addition, consider indexing the event parameters.

Incomplete test suite

The testing suite covering in-scope contracts is incomplete. Although OgvStaking.t.sol and Rewards.t.sol test files were provided, the instructions in the README for the project do not sufficiently provide guidance on how to run comprehensive tests for the repo.

As the test suite was left outside the audit’s scope, please consider thoroughly reviewing the test suite to make sure all tests run successfully after following the instructions in the README file. Extensive unit tests aiming at 95% coverage are recommended in order for the security of the project to be assessed in a future audit. Integrating test coverage reports in every single pull request of the project is also highly advisable.

Update: Fixed in pull request #100.

Low Severity

Lack of documentation

Throughout the codebase, we found several instances where documentation was lacking. This hinders reviewers’ understanding of the code’s intention, which is fundamental to correctly assess not only security but also correctness. Additionally, docstrings improve readability and ease maintenance. They should explicitly explain the purpose or intention of the functions, the scenarios under which they can fail, the roles allowed to call them, the values returned, and the events emitted. For instance:

• The functions and variables in the OgvStaking contract lack documentation.
• The functions and some variables in the RewardsSource contract lack documentation.
• The setInflation function should explicitly state:
  • The start time of the first slope may lie in the future, which allows an implicit configuration of a zero slope before the first start time.
  • The end time of the end slope will always be set to infinity (type(uint64).max), which implies that unless Slope.ratePerDay is set to zero in the last slope a potentially unbounded number of OGV tokens could be minted.
• In the OgvStaking contract, when a user stakes OGV tokens before the epoch time is reached, the tokens are locked for the specified duration after epoch. Hence, the tokens are locked for longer than expected. Users might be unaware of this behavior, so consider documenting it explicitly.

Consider thoroughly documenting the aforementioned code using the NatSpec format to increase the understandability of the codebase.

Update: Fixed in pull request #102.

Voting token name and symbol are mixed up

In the OgvStaking contract the return values of the name and symbol functions are mixed up. Also, following this blog post from March 29, 2022, it is stated that the token symbol will be veOGV instead of OGVe.

Consider swapping the return values to correctly reflect the token parameters as well as renaming the symbol to match the announcement.

Update: Fixed in pull request #93.

Notes & Additional Information

Gas savings

Throughout the codebase we found some instances that could be improved to save gas:

• In the setInflation function of the RewardsSource contract, gas can be saved with the following changes:
  • Consider writing slopes.length to the stack with uint256 slopesLength = slopes.length; and using that variable instead of reading from memory each time.
  • Additionally, the last overwrite of minSlopeStart for index i = slopes.length - 1 is not needed. Consider moving it within the condition two lines above for a minor gas optimization.
• To calculate staking rewards the internal function _calcRewards iterates through an array of up to 48 slopes to compute the results that have been accumulated since it was last called. While the computation appears to be correct, many conditions lead to an unnecessary iteration of the entire array:
  • The gas optimization to return zero for the nextSlopeIndex has not been applied consistently, it is missing for the condition last >= block.timestamp.
  • The condition rangeEnd < slopeStart leads the loop to continue with the next iteration, while the correct behavior would be to break, because no future slope can match a rangeEnd in the past.
  • The condition slopeEnd < rangeEnd will never be true and is not the condition that corresponds to the comment “No future slope could match”. Consider replacing it with the condition rangeEnd < slopeEnd which holds when no future slope can match.
  • To skip slope iterations when range limits match the slope limits, the conditions need to include the equal case. Hence, change to rangeStart >= slopeEnd, rangeEnd <= slopeStart, and slopeEnd >= rangeEnd.

Consider applying the above changes to make the code more gas efficient while maintaining its readability.

Update: Partially fixed in pull request #86 and #87. The unnecessary slopeEnd < rangeEnd check is unchanged. In addition, the slope iterations are still not skipped when range limits match slope limits.

Undocumented magic numbers

In the Governance contract the constructor uses several magic numbers to define key characteristics of the deployed system. This includes proposal delay, voting period, and voting threshold as well as the time extension in the case of a late quorum. Moreover, the magic numbers lack documentation and implicitly assume a fixed block time of 15 seconds.

Consider documenting these numbers more explicitly by describing their purpose and provide contextual information regarding time spans and average block times, such that it is easier for anyone to understand the characteristics.

Unused imports

In RewardsSource the following imports are not used:

• ERC20Votes
• ERC20Permit
• PRBMathUD60x18

Consider removing the imports.

Additionally, the import ERC20 is used as the type of ogv. However, no ERC20-functions are called on it. Consider declaring ogv as type Mintable as only the mint function is called on it and remove the ERC20 import.

Update: Fixed in pull request #94.

Missing license identifier

In the RewardsSource.sol and OgvStaking.sol files, a SPDX-license-identifier comment is missing.

Consider adding the MIT license identifier in accordance with the rest of the codebase.

Update: Fixed in pull request #95.

Conclusions

We audited the governance and staking system over the course of one week. We feel that once better documentation and testing is added to the codebase, along with addressing the reported findings, the overall quality of the project will be in a good spot. It was great to work together with Origin on this, as they were very open and responsive to discussions. We reported two high severity findings along with additional lower severity recommendations that address best practices and reduce the potential attack surface.