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Balancer V2

87%

Previous versions

Process Quality Review (0.9)

Balancer V2

Final score:87%
Date:07 Nov 2023
Audit Process:version 0.9
Author:Rex
PQR Score:92%

-5%(Penalty)

PASS

Protocol Website:https://balancer.fi/

Security Incidents

Date:22 Aug 2023
Details: On August 22, Balancer officially announced the detection of a severe vulnerability affecting multiple V2 Boost pools, with only 1.4% of the Total Value Locked (TVL) impacted. Several pools were paused temporarily, and users were urged to withdraw their Liquidity Provider (LP) assets promptly. On August 27, the MistEye system by SlowMist detected suspicious transactions exploiting the Balancer vulnerability. Total loss was 580k (1.7% of TVL) . This was an unforeseeable event which is being paid back. This results in a 5% penalty until 25 Feb 2024. (revised 30 Oct)
Reference Linklink
Date:28 Jun 2020
Details: $500K was extracted from a Balancer pool that held STA tokens. The attacker was able to exploit the incompatibility between deflationary tokens (such as STA) which caused "a mismatch between the actual STA balance of BPool and its internal bookkeeping records". This allowed the exploiter to repeatedly swap out the STA of the BPool via a flash loan from dYdX that they then used for a reentrancy manipulation of the gulp() function which resulted in a falsified maintained state of the _records[token].balance function.
Reference Linklink

Scoring Appendix

The final review score is indicated as a percentage. The percentage is calculated as Achieved Points due to MAX Possible Points. For each element the answer can be either Yes/No or a percentage. For a detailed breakdown of the individual weights of each question, please consult this document.

The blockchain used by this protocol
Avalanche
Ethereum
Polygon
#QuestionAnswer
100%
1.100%
2.Yes
3.100%
4.100%
96%
5.Yes
6.100%
7.100%
8.80%
9.100%
91%
10.100%
11.50%
12.100%
13.Yes
89%
14.100%
15.100%
16.100%
17.0%
18.0%
92%
19.100%
20.100%
21.100%
22.80%
23.20%
Total:92%

Very simply, the review looks for the following declarations from the developer's site. With these declarations, it is reasonable to trust the smart contracts.

  • Here are my smart contract on the blockchain(s)
  • Here is the documentation that explains what my smart contracts do
  • Here are the tests I ran to verify my smart contracts
  • Here are all the security steps I took to safeguard these contracts
  • Here is an explanation of the control I have to change these smart contracts
  • Here is how these smart contracts get information from outside the blockchain (if applicable)

This report is for informational purposes only and does not constitute investment advice of any kind, nor does it constitute an offer to provide investment advisory or other services. Nothing in this report shall be considered a solicitation or offer to buy or sell any security, token, future, option or other financial instrument or to offer or provide any investment advice or service to any person in any jurisdiction. Nothing contained in this report constitutes investment advice or offers any opinion with respect to the suitability of any security, and the views expressed in this report should not be taken as advice to buy, sell or hold any security. The information in this report should not be relied upon for the purpose of investing. In preparing the information contained in this report, we have not taken into account the investment needs, objectives and financial circumstances of any particular investor. This information has no regard to the specific investment objectives, financial situation and particular needs of any specific recipient of this information and investments discussed may not be suitable for all investors.

Any views expressed in this report by us were prepared based upon the information available to us at the time such views were written. The views expressed within this report are limited to DeFiSafety and the author and do not reflect those of any additional or third party and are strictly based upon DeFiSafety, its authors, interpretations and evaluation of relevant data. Changed or additional information could cause such views to change. All information is subject to possible correction. Information may quickly become unreliable for various reasons, including changes in market conditions or economic circumstances.

This completed report is copyright (c) DeFiSafety 2023. Permission is given to copy in whole, retaining this copyright label.

Code and Team

100%

This section looks at the code deployed on the relevant chains and team aspects. The document explaining these questions is here.

1. Are the smart contract addresses easy to find? (%)

Answer: 100%

The Smart contract addresses for Balancer can be found in the "Smart Contracts" section of their documentation here. The addresses are clearly labeled and easy to find, which aligns with the best practices for transparency and accessibility. This question receives a score of 100%.

Percentage Score Guidance:
100%
Clearly labelled and on website, documents or repository, quick to find
70%
Clearly labelled and on website, docs or repo but takes a bit of looking
40%
Addresses in mainnet.json, in discord or sub graph, etc
20%
Address found but labeling not clear or easy to find
0%
Executing addresses could not be found

2. Does the protocol have a public software repository? (Y/N)

Answer: Yes
Score Guidance:
Yes
There is a public software repository with the code at a minimum, but also normally test and scripts. Even if the repository was created just to hold the files and has just 1 transaction.
No
For teams with private repositories.

3. Is the team public (not anonymous)?

Answer: 100%

The team is public. The contributors on GitHub is public.

Percentage Score Guidance:
100%
At least two names can be easily found in the protocol's website, documentation or medium. These are then confirmed by the personal websites of the individuals / their linkedin / twitter.
50%
At least one public name can be found to be working on the protocol.
0%
No public team members could be found.

4. How responsive are the devs when we present our initial report?

Answer: 100%

Devs took more than 72 hours to respond but after were very active. 100%.

Percentage Score Guidance:
100%
Devs responded within 24hours
75%
Devs responded within 48 hours
50%
Devs responded within 72 hours
25%
Data not entered yet
0%
no dev response within 72 hours

Code Documentation

96%

This section looks at the software documentation. The document explaining these questions is here.

5. Is there a whitepaper? (Y/N)

Answer: Yes

Location: https://docs.balancer.fi/concepts/pools/    The documentation on the protocol suffices as a white paper.

Score Guidance:
Yes
There is an actual whitepaper or at least a very detailed doc on the technical basis of the protocol.
No
No whitepaper. Simple gitbook description of the protocol is not sufficient.

6. Is the protocol's software architecture documented? (%)

Answer: 100%

This protocol's software architecture is in a DeFiLytic tool that links with other detailed docs.

Percentage Score Guidance:
100%
Detailed software architecture diagram with explanation
75%
Basic block diagram of software aspects
0%
No software architecture documentation

7. Does the software documentation fully cover the deployed contracts' source code? (%)

Answer: 100%

There is 100% coverage of deployed contracts by software function documentation, which is in the code.    As documented below from https://github.com/balancer/balancer-v2-monorepo/blob/master/pkg/pool-linear/contracts/LinearPoolRebalancer.sol     function _depositToPool(IERC20 token, uint256 amount) private {   // Tokens can be deposited to the Vault with a 'deposit' operation, but that requires a prior 'managed'   // balance to exist. We therefore have to perform two operations: one to set the 'managed' balance (representing   // the new tokens that resulted from wrapping or unwrapping and which we are managing for the Pool), and   // another to deposit.   IVault.PoolBalanceOp[] memory deposit = new IVault.PoolBalanceOp;     // First, we inform the Vault of the 'managed' tokens.   deposit.kind = IVault.PoolBalanceOpKind.UPDATE;   deposit[0].poolId = _poolId;   deposit[0].amount = amount;   deposit[0].token = token;     // Then, we deposit them, clearing the 'managed' balance.   deposit[1].kind = IVault.PoolBalanceOpKind.DEPOSIT;   deposit[1].poolId = _poolId;   deposit[1].amount = amount;   deposit[1].token = token;     // Before we can deposit tokens into the Vault however, we must approve them.   token.safeApprove(address(_vault), amount);     _vault.managePoolBalance(deposit);   }     function _getDesiredMainTokenBalance() private view returns (uint256) {   // The desired main token balance is the midpoint of the lower and upper targets. Keeping the balance   // close to that value maximizes Pool swap volume by allowing zero-fee swaps in either direction.   (uint256 lowerTarget, uint256 upperTarget) = _pool.getTargets();   uint256 midpoint = (lowerTarget + upperTarget) / 2;

Percentage Score Guidance:
100%
All contracts and functions documented
80%
Only the major functions documented
79 - 1%
Estimate of the level of software documentation
0%
No software documentation

8. Is it possible to trace the documented software to its implementation in the protocol's source code? (%)

Answer: 80%

There is some implicit traceability between software documentation and implemented code. The documentation is in the comments, right with the code. I will give this an 80%

Percentage Score Guidance:
100%
will be Requirements with traceability to code and to tests (as in avionics DO-178)
90%
on formal requirements with some traceability
80%
for good autogen docs https://developers.morpho.xyz/
60%
Clear association between code and documents via non explicit traceability
40%
Documentation lists all the functions and describes their functions
0%
No connection between documentation and code

9. Is the documentation organized to ensure information availability and clarity? (%)

Answer: 100%

Information is well organized.

Percentage Score Guidance:
100%
Information is well organized, compartmentalized and easy to navigate
50%
information is decently organized but could use some streamlining
0%
information is generally obfuscated

Testing

91%

This section covers the testing process of the protocol’s smart contract code previous to its deployment on the mainnet. The document explaining these questions is here.

10. Has the protocol tested their deployed code? (%)

Answer: 100%

Code examples are in the Appendix at the end of this report.. As per the SLOC, there is 329% testing to code (TtC).    This score is guided by the Test to Code ratio (TtC). Generally a good test to code ratio is over 100%. However, the reviewer's best judgement is the final deciding factor.    TtC = 70602 / 21406 =329%    ───────────────────────────────────────────────────────────────────────────────  Language Files Lines Blanks Comments Code Complexity  ───────────────────────────────────────────────────────────────────────────────  JavaScript 102 21406 3194 6611 11601 1161  ───────────────────────────────────────────────────────────────────────────────  Total 102 21406 3194 6611 11601 1161  ───────────────────────────────────────────────────────────────────────────────  Estimated Cost to Develop $354,254  Estimated Schedule Effort 9.271584 months  Estimated People Required 3.394513  ───────────────────────────────────────────────────────────────────────────────  Processed 942299 bytes, 0.942 megabytes (SI)  ───────────────────────────────────────────────────────────────────────────────  Language Files Lines Blanks Comments Code Complexity  ───────────────────────────────────────────────────────────────────────────────  TypeScript 140 54069 9447 1140 43482 2201  JavaScript 133 10143 1879 1871 6393 251  Markdown 1 6390 7 0 6383 0  ───────────────────────────────────────────────────────────────────────────────  Total 274 70602 11333 3011 56258 2452  ───────────────────────────────────────────────────────────────────────────────  Estimated Cost to Develop $1,859,040  Estimated Schedule Effort 17.407797 months  Estimated People Required 9.487700  ───────────────────────────────────────────────────────────────────────────────  Processed 2978856 bytes, 2.979 megabytes (SI)  ───────────────────────────────────────────────────────────────────────────────

Percentage Score Guidance:
100%
TtC > 120% Both unit and system test visible
80%
TtC > 80% Both unit and system test visible
40%
TtC < 80% Some tests visible
0%
No tests obvious

11. How covered is the protocol's code? (%)

Answer: 50%

50% No indication of code coverage but clearly there is a complete set of tests. For Balancer for specifically "coverage" testing, that is tough on V2, since our code breaks the standard tools (specifically, the way we do errors with BalancerErrors, as it involves encoded strings in assembly). Balancer is working on getting around that, at least for future development.

Percentage Score Guidance:
100%
Documented full coverage
99 - 51%
Value of test coverage from documented results
50%
No indication of code coverage but clearly there is a complete set of tests
30%
Some tests evident but not complete
0%
No test for coverage seen

12. Is there a detailed report of the protocol's test results?(%)

Answer: 100%

On #12, Balancer has an extremely robust CI process. For instance . With every deployment, they generate and compare the bytecode with the deployed versions on chain, ensuring that the source code (i.e., build-info) in the repo is correct. It also computes and verifies the action-ids, which are used for generating permissions (so this is an integrity and important security check, as this is what the Maxis use to create governance transactions). Additionally, it generates and checks the deployment addresses of all contracts, including their active or deprecated status. This is great documentation for integrators. Finally, it verifies that all links in the documents are valid, ensuring the comments and markdown files are up-to-date.

Percentage Score Guidance:
100%
Detailed test report as described below
70%
GitHub code coverage report visible
0%
No test report evident

13. Has the protocol undergone Formal Verification? (Y/N)

Answer: Yes

This protocol has undergone formal verification. https://github.com/balancer/balancer-v2-monorepo/blob/master/audits/certora/2021-04-22.pdf

Score Guidance:
Yes
Formal Verification was performed and the report is readily available
No
Formal Verification was not performed and/or the report is not readily available.

Security

89%

This section looks at the 3rd party software audits done. It is explained in this document.

14. Is the protocol sufficiently audited? (%)

Answer: 100%

Multiple high quality audits. Top notch

Percentage Score Guidance:
100%
Multiple Audits performed before deployment and the audit findings are public and implemented or not required
90%
Single audit performed before deployment and audit findings are public and implemented or not required
70%
Audit(s) performed after deployment and no changes required. The Audit report is public.
65%
Code is forked from an already audited protocol and a changelog is provided explaining why forked code was used and what changes were made. This changelog must justify why the changes made do not affect the audit.
50%
Audit(s) performed after deployment and changes are needed but not implemented.
30%
Audit(s) performed are low-quality and do not indicate proper due diligence.
20%
No audit performed
0%
Audit Performed after deployment, existence is public, report is not public OR smart contract address' not found.
Deduct 25% if the audited code is not available for comparison.

15. Is there a matrix of audit applicability on deployed code (%)? Please refer to the example doc for reference.

Answer: 100%

The list of audits indicates the element of the software that was audited and the date and the applicability of the audit. Ideal, 100%

Percentage Score Guidance:
100%
Current and clear matrix of applicability
50%
Out of date matrix of applicability
0%
no matrix of applicability

16. Is the bug bounty value acceptably high (%)

Answer: 100%

This protocol offers an active bug bounty of $1,000K

Percentage Score Guidance:
100%
Bounty is 10% TVL or at least $1M AND active program (see below)
90%
Bounty is 5% TVL or at least 500k AND active program
80%
Bounty is 5% TVL or at least 500k
70%
Bounty is 100k or over AND active program
60%
Bounty is 100k or over
50%
Bounty is 50k or over AND active program
40%
Bounty is 50k or over
20%
Bug bounty program bounty is less than 50k
0%
No bug bounty program offered / the bug bounty program is dead
An active program means that a third party (such as Immunefi) is actively driving hackers to the site. An inactive program would be static mentions on the docs.

17. Is there documented protocol monitoring (%)?

Answer: 0%

There is no documentation on protocol monitoring

Percentage Score Guidance:
100%
Multiple Audits performed before deployment and results public and implemented or not required
80%
Documentation covering protocol specific threat monitoring
60%
Documentation covering generic threat with incident response
40%
Documentation covering operational monitoring with incident response
0%
No on chain monitoring
Add 20% for documented incident response process

18. Is there documented protocol front-end monitoring (%)?

Answer: 0%

There is no documentation on protocol monitoring    [...]

Percentage Score Guidance:
25%
DDOS Protection
25%
DNS steps to protect the domain
25%
Intrusion detection protection on the front end
25%
Unwanted front-end modification detection

Admin Controls

92%

This section covers the documentation of special access controls for a DeFi protocol. The admin access controls are the contracts that allow updating contracts or coefficients in the protocol. Since these contracts can allow the protocol admins to "change the rules", complete disclosure of capabilities is vital for user's transparency. It is explained in this document.

19. Is the protocol code immutable or upgradeable? (%)

Answer: 100%

This is immutable code.

Percentage Score Guidance:
100%
Fully Immutable
80%
Updateable with Timelock > 1wk
50%
Updateable code with Roles
30%
Updateable code MultiSig
0%
Updateable code via EOA
Pause control does not impact immutability

20. Is the protocol's code upgradeability clearly explained in non technical terms? (%)

Answer: 100%

100% Code is Immutable and clearly indicated so in documentation

Percentage Score Guidance:
100%
Code is Immutable and clearly indicated so in documentation OR
100%
Code is upgradeable and clearly explained in non technical terms
50%
Code is upgradeable with minimal explanation
50%
Code is immutable but this is not mentioned clearly in the documentation
0%
No documentation on code upgradeability

21. Are the admin addresses, roles and capabilities clearly explained? (%)

Answer: 100%

Code is immutable and is clearly indicated here. Actions that can be made on the contracts are itemized here for each chain.

Percentage Score Guidance:
100%
Admin addresses, roles and capabilities clearly explained OR
100%
If immutable code and no changes possible, no admins required
80%
Admin addresses, roles and capabilities incompletely explained but good content
40%
Admin addresses, roles and capabilities minimally explained, information scattered
0%
No information on admin addresses, roles and capabilities

22. Are the signers of the admin addresses clearly listed and provably distinct humans? (%)

Answer: 80%

All signers are clearly listed here. Many are provably human. Therefore 80%. Our goal is that evidence of clearly distinct human becomes part of this data set either through Gitcoin passport, KYC or even DeFiSafety multisig certification. But this list is very good.

Percentage Score Guidance:
100%
All signers of the admin addresses are clearly listed and provably distinct humans OR
100%
If immutable code and no changes possible, therefore no admins
60%
All signers of the admin addresses are clearly listed
30%
Some signers of the admin addresses are listed
0%
No documentation on the admin addresses

23. Is there a robust documented transaction signing policy? Please refer to the Example doc for reference.(%)

Answer: 20%

Signer duties gives at least documentation about liveliness. While a quality protocol such as Balancer I am personally confident that all of the signers are conscientious about their transaction signing processes. The goal of this question is to normalize documenting the minimum acceptable process and checking signers against it. The goal is to start processes that allow lost key hacks to slowly disappear. We will give 20% for the signer duties comments.

Percentage Score Guidance:
100%
If immutable and no changes possible
80%
Robust transaction signing process (7 or more elements)
70%
Adequate transaction signing process (5 or more elements)
60%
Weak transaction signing process (3 or more elements)
0%
No transaction signing process evident
Evidence of audits of signers following the process add 20%