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Flashloan (flashloan)

Summary and Usage​

The Flashloan detector analyzes a smart contract for situations where a token balance is used to determine the amount of funds transferred by a token transfer, or to determine if a transfer will occur.

Flash loans allow a user to take a loan without any collateral if they return the money plus a fee before the end of the transaction. For example, well known protocols such as AAVE offer flash loans. This can allow users to temporarily inflate their token balance. Since user token balances can be manipulated through the use of a flash loan, this can lead to vulnerabilities if contracts don't take measures to protect against such attacks.

Usage​

The Flashloan detector is invoked by selecting "Flashloan" in the Detector selection during the tool configuration step.

Example and Explanation​

The following ERC20 contract contains a function that will pay out rewards based on a user's balance.

flashloan.sol
// SPDX-License-Identifier: MIT
pragma solidity ^0.8.10;

import "@openzeppelin/contracts/token/ERC20/ERC20.sol";


contract Flashloan is ERC20 {
    function payRewards() public {
        token.transfer(msg.sender, balanceOf(msg.sender / 10));
    }
}

The payRewards() function can be exploited through the use of a flash loan. Since it just checks the current balance, a user can use a flash loan to inflate their balance before requesting rewards, which will allow them to claim more rewards than should be allowed.

Vanguard Output​

When run on the above contract, the Flashloan detector will make the following alert:

[High] Flashloan vulnerability
Reported By: vanguard:flashloan
Location: Flashloan.payRewards @ Flashloan.sol:7:35
Confidence: 0.65
More Info: placeholder
Details:
The result of a call to balanceOf(address) at Flashloan.payRewards @ Flashloan.sol:7:35 may cause a flashloan vulnerability in the following location(s)
  * ⚠️ The amount of currency transferred by transfer(address,uint256) at Flashloan.payRewards @ Flashloan.sol:7:9

The detector reports that the call to balanceOf(address), which returns the token balance of a user, is involved in the computation of the amount of funds transferred. It also includes the location of the calls to balanceOf(address) and transfer(address,uint256).

Vulnerability Patterns​

  • The Flashloan detector will look for internal or external calls to balanceOf(address) and for user balances that are tracked by a contract variable (these will be referred to as "tainted contract variables" in an alert).

  • The Flashloan detector will then generate a finding when the amount field of an internal or external call to transfer() or transferFrom(), or the condition of a require() statement guarding such a transfer is influenced by a balance check.

Limitations​

  • This detector only supports the balance checks and transfers described above. Flash loans involving native currencies, ERC721 tokens, or votes are not supported.

Assessing Severity​

The severity of a finding reported by the Flashloan detector depends on how the token balance is used. If the balance is just used to withdraw funds (and is decremented with the withdrawal), the function is likely not vulnerable to a flash loan attack. If the balance is used to determine rewards or transfers money to the user in some way other than a simple withdrawal, the vulnerability could be very severe. To precisely assess the vulnerability, consider how a user with unlimited funds could affect the protocol.

This detector can also report false positives in contracts that take measures to mitigate against flash loan attacks. For example, if a delay is enforced before allowing users to withdraw, an alert may still be generated even though this contract will not be vulnerable to a flash loan attack.