MANTRA Chain

Audit name:

[L1] MANTRA Chain / Blockchain Audit / Jun2024

Date:

Nov 8, 2024

Table of Content

→Introduction

→Audit Summary

→System Overview

→Risks

→Findings

→Appendix 1. Severity Definitions

→Appendix 2. Scope

→Disclaimer

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Introduction

We express our gratitude to the MANTRA Chain team for the collaborative engagement that enabled the execution of this Blockchain Protocol Security Assessment.

MANTRA Chain is a Layer 1 blockchain meticulously engineered to navigate the complex intersection of decentralized finance and regulatory compliance. It offers a permissionless environment for deploying applications that necessitate adherence to financial regulations. Built on the robust Cosmos SDK and leveraging the Inter-Blockchain Communication protocol (IBC), MANTRA Chain ensures fast and secure transactions both on-chain and cross-chain.

A standout feature is its native Decentralized ID (DID) system, which streamlines user onboarding and KYC/AML procedures using non-transferable Soulbound NFTs. This innovative approach enhances security and simplifies compliance for both users and developers. Furthermore, the chain's hybrid DEX combines the benefits of automated market making with an order book model, offering greater capital efficiency and enhanced trading experiences.

Document
Name	Blockchain Protocol Review and Security Analysis Report for MANTRA Chain
Audited By	Tanuj Soni
Approved By	Nino Lipartiia
Website	https://www.mantrachain.io/→
Changelog	06/09/2024 - Preliminary Report
Changelog	08/11/2024 - Final Report
Platform	Mantra Chain
Language	Golang
Tags	Cosmos SDK, DID, Soulbound NFT, Hybrid DEX
Methodology	https://hackenio.cc/blockchain_methodology→

Document
Name
Blockchain Protocol Review and Security Analysis Report for MANTRA Chain
Audited By
Tanuj Soni
Approved By
Nino Lipartiia
Website
https://www.mantrachain.io/→
Changelog
06/09/2024 - Preliminary Report
Changelog
08/11/2024 - Final Report
Platform
Mantra Chain
Language
Golang
Tags
Cosmos SDK, DID, Soulbound NFT, Hybrid DEX
Methodology
https://hackenio.cc/blockchain_methodology→

Review Scope
Repository	https://github.com/MANTRA-Finance/mantrachain→
Commit	99fd49f11413d36993ef31fdca7b3455c3de2f0d

Review Scope
Repository
https://github.com/MANTRA-Finance/mantrachain→
Commit
99fd49f11413d36993ef31fdca7b3455c3de2f0d

Audit Summary

16Total Findings

2Resolved

14Accepted

0Mitigated

1critical

1high

1medium

5low

8observation

The system users should acknowledge all the risks summed up in the risks section of the report

Documentation quality

User-facing documentation for use-cases and features is readily available and well-developed.
x/liquidity, x/lpfarm, x/marketmakerand x/coinfactory benefit from detailed documentation inherited from Crescent Network and Osmosis.
The x/did, x/token, and x/guard modules have adequate technical documentation for developers.
Technical implementation details within the x/txfees module could be enhanced.
Documenting KYC/whitelisting procedures would be beneficial.
A comprehensive technical document outlining the purpose and interactions of each module within the system is necessary for a holistic overview.

Code quality

The codebase adheres to established Go programming best practices, promoting maintainability and performance.
x/liquidity, x/lpfarm, x/marketmaker and x/coinfactory inherit and maintain high code quality standards from established projects like Crescent Network and Osmosis.
Several functions exhibit high Cyclomatic Complexity, Excessive Function Length, and Deeply Nested Conditional Structures, suggesting potential areas for refactoring and simplification.
The x/token module contains redundant code.

Architecture quality

Mantra Chain utilizes the Cosmos SDK, a mature and widely-adopted framework for building blockchains, contributing to a robust technical foundation.
The project leverages modules from established projects, adapting them to Mantra's specific use case, potentially accelerating development and enhancing reliability.
The implementation of DID and soul-bound NFTs for identity verification demonstrates a commitment to security and user control over their digital identity.
The guard module's capability to assign multiple permission types to whitelisted addresses showcases flexibility in access control.
The current architecture grants the chain administrator excessive control over the x/guard module, undermining decentralized governance principles.

Test coverage

E2E test cases exist to validate positive and some negative scenarios, providing valuable insights into the interaction of different modules.
Modules adopted from other projects have brought along their existing unit tests, offering a degree of pre-existing coverage.
Unit test coverage is currently low and could be improved.

System Overview

Mantrachain leverages the Cosmos SDK for its core architecture and incorporates various modules for specific functionalities. Some modules are inherited and adapted from existing projects, while others are developed in-house. The system supports decentralized identity management, user permission control, liquidity provision, and market-making activities.

x/coinfactory: Enables permissionless token creation.
x/did: Manages decentralized identifiers (DIDs) for identity verification.
x/guard: Handles user privileges and access control.
x/liquidity: Core module for creating and managing liquidity pools.
x/lpfarm: Implements liquidity provider (LP) farming functionalities.
x/marketmaker: Facilitates market maker registration and incentive distribution.
x/token: Manages token-related operations.
x/txfees: Configures fee tokens and handles gas fee collection.

Risks

Centralization Risk: The use of a single externally owned account (EOA) as chain admin and the x/guard module for access control introduces centralization. If compromised, it could enable unauthorized control over critical functions. While this setup is intended as a temporary measure for development, it deviates from decentralization principles. The planned Role-Based Access Control (RBAC) aims to distribute control to mitigate this risk.

Audit Coverage Gaps: The modules x/airdrop, x/bridge, and x/rewards were removed from the audit scope during the process. Despite this exclusion, the x/airdrop and x/bridge modules remain in the codebase. Their lack of review presents potential risks, as undiscovered vulnerabilities in these modules could impact the system's integrity or lead to exploitation.

Findings

Code ―	Title	Status	Severity
F-2024-4346	Critical Vulnerability in Dependencies	fixed	Critical
F-2024-5508	Security Vulnerabilities in CosmWasm	fixed	High
F-2024-5511	Unchecked Fee Manipulation	accepted	Medium
F-2024-5641	Admin Role Decentralization Leads to Non-Terminable Private Plans	accepted	Low
F-2024-5510	Single-Step Ownership Transfer Risks	accepted	Low
F-2024-5469	Misdirection of Collected Fees to an EOA	accepted	Low
F-2024-5456	Insufficient Validation and Lack of FeeToken Liveness Checks	accepted	Low
F-2024-5313	Centralized Control and Elevated Admin Privileges	accepted	Low
F-2024-5911	Privilege Revocation and Limit Order Conflict	accepted	Observation
F-2024-5910	Missing Explicit Whitelisted Address Checks in DEX Trading Functions	accepted	Observation

1-10 of 16 findings

Findings like these can secure your blockchain.

Appendix 1. Severity Definitions

Severity	Description
Critical	Vulnerabilities that can lead to a complete breakdown of the blockchain network's security, privacy, integrity, or availability fall under this category. They can disrupt the consensus mechanism, enabling a malicious entity to take control of the majority of nodes or facilitate 51% attacks. In addition, issues that could lead to widespread crashing of nodes, leading to a complete breakdown or significant halt of the network, are also considered critical along with issues that can lead to a massive theft of assets. Immediate attention and mitigation are required.
High	High severity vulnerabilities are those that do not immediately risk the complete security or integrity of the network but can cause substantial harm. These are issues that could cause the crashing of several nodes, leading to temporary disruption of the network, or could manipulate the consensus mechanism to a certain extent, but not enough to execute a 51% attack. Partial breaches of privacy, unauthorized but limited access to sensitive information, and affecting the reliable execution of smart contracts also fall under this category.
Medium	Medium severity vulnerabilities could negatively affect the blockchain protocol but are usually not capable of causing catastrophic damage. These could include vulnerabilities that allow minor breaches of user privacy, can slow down transaction processing, or can lead to relatively small financial losses. It may be possible to exploit these vulnerabilities under specific circumstances, or they may require a high level of access to exploit effectively.
Low	Low severity vulnerabilities are minor flaws in the blockchain protocol that might not have a direct impact on security but could cause minor inefficiencies in transaction processing or slight delays in block propagation. They might include vulnerabilities that allow attackers to cause nuisance-level disruptions or are only exploitable under extremely rare and specific conditions. These vulnerabilities should be corrected but do not represent an immediate threat to the system.

Severity
Critical
Description
Vulnerabilities that can lead to a complete breakdown of the blockchain network's security, privacy, integrity, or availability fall under this category. They can disrupt the consensus mechanism, enabling a malicious entity to take control of the majority of nodes or facilitate 51% attacks. In addition, issues that could lead to widespread crashing of nodes, leading to a complete breakdown or significant halt of the network, are also considered critical along with issues that can lead to a massive theft of assets. Immediate attention and mitigation are required.
Severity
High
Description
High severity vulnerabilities are those that do not immediately risk the complete security or integrity of the network but can cause substantial harm. These are issues that could cause the crashing of several nodes, leading to temporary disruption of the network, or could manipulate the consensus mechanism to a certain extent, but not enough to execute a 51% attack. Partial breaches of privacy, unauthorized but limited access to sensitive information, and affecting the reliable execution of smart contracts also fall under this category.
Severity
Medium
Description
Medium severity vulnerabilities could negatively affect the blockchain protocol but are usually not capable of causing catastrophic damage. These could include vulnerabilities that allow minor breaches of user privacy, can slow down transaction processing, or can lead to relatively small financial losses. It may be possible to exploit these vulnerabilities under specific circumstances, or they may require a high level of access to exploit effectively.
Severity
Low
Description
Low severity vulnerabilities are minor flaws in the blockchain protocol that might not have a direct impact on security but could cause minor inefficiencies in transaction processing or slight delays in block propagation. They might include vulnerabilities that allow attackers to cause nuisance-level disruptions or are only exploitable under extremely rare and specific conditions. These vulnerabilities should be corrected but do not represent an immediate threat to the system.

Appendix 2. Scope

The scope of the project includes the following components from the provided repository:

Scope Details
Repository	https://github.com/MANTRA-Finance/Mantrachain→
Commit	99fd49f11413d36993ef31fdca7b3455c3de2f0d

Scope Details
Repository
https://github.com/MANTRA-Finance/Mantrachain→
Commit
99fd49f11413d36993ef31fdca7b3455c3de2f0d

Components in Scope

Modules:

x/coinfactory
x/did
x/guard
x/liquidity
x/lpfarm
x/marketmaker
x/token
x/txfees

Assets in Scope

coinfactory - x/coinfactory

txfees - x/txfees

liquidity - x/liquidity

guard - x/guard

lpfarm - x/lpfarm

token - x/token

dependencies - dependencies

CosmWASM - CosmWASM

Code Quality - Code Quality

Test Coverage - Test Coverage

Dependencies - Dependencies

Disclaimer

Hacken Disclaimer

Technical Disclaimer

Hacken Extractor