Bitlayer

We express our gratitude to the Bitlayer team for the collaborative engagement that enabled the execution of this Smart Contract Security Assessment.

Bitlayer leads with its innovative BitVM technology, offering a secure and computationally complete solution for enhancing Bitcoin's layer 2 capabilities.

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

BitLayer introduces PegToken, an innovative system operating on the EVM blockchains. This project, utilizing a UUPS upgradeable framework, is designed for dynamic token management and control.

The files in the scope:

• PegToken.sol:

• • This contract is an ERC20 token with extended functionalities. Key features include pausing/unpausing token transfers, blacklisting addresses, freezing/unfreezing tokens, and cross-chain burning.

  • Token minting is controlled, ensuring no pre-minting.

  • Allows cross-chain token burning, enabling wider ecosystem interoperability.

• TokenManager.sol:

• • Central control unit for creating and managing PegToken instances.

  • Implements a robust role-based access control system with distinct roles such as Admin, Operator, Freezer, and Pauser.

  • Facilitates token creation, upgrade, minting, and management of token state (pause/unpause, freeze/unfreeze).

Key Functionalities and Roles:

• Token Creation and Management: Operators can dynamically create new PegToken instances with specific attributes and upgrade existing tokens.

• Governance and Control: Admins have overarching control over the system, capable of pausing entire operations (stopTheWorld).

• Token Minting and Supply Management: Operators control minting of PegTokens, crucial for managing the token supply and ecosystem balance.

• Pause and Freeze Mechanisms: Pausers can temporarily halt token transactions, while Freezers can immobilize tokens in specific accounts, adding layers of control and security.

• Cross-Chain Functionality: CrossChainBurn feature for PegToken indicates a bridge between different blockchain networks, enhancing the token's utility and reach.

Privileged roles

TokenManager.sol:

• AdminRole:

• • Role: The AdminRole is a pivotal role with comprehensive control over the entire contract. Initially granted to the contract creator, this role has the highest level of authority.

  • Capabilities:

  • • Authorize upgrades of the contract using _authorizeUpgrade.

    • Grant or revoke all other roles.

    • Implement the stopTheWorld feature, impacting the entire system.

• Operator:

• • Role: Operators are responsible for the day-to-day management of the token ecosystem. They handle critical functions related to token operations.

  • Capabilities:

  • • Create new token instances using createToken.

    • Upgrade token contracts with upgradeToken.

    • Set blacklist status for addresses using setBlackList.

    • Assign or revoke minter roles for each token using setMinter.

• FreezeRole:

• • Role: Holders of the FreezeRole have control over the liquidity of tokens by managing their availability.

  • Capabilities:

  • • Freeze or unfreeze tokens for specific addresses using freezeToken and unfreezeToken.

    • Recall tokens from one address to another using recall.

• PauserRole:

• • Role: The PauserRole is designated to manage the transactional state of tokens, providing a control mechanism over their transferability.

  • Capabilities:

  • • Pause or unpause token transactions on an individual token basis using pauseToken and unpauseToken.

PegToken.sol:

• Minter:

• • Role: Minters are addresses authorized to create new tokens in the system.

  • Capabilities:

  • • Mint new tokens using mint, subject to not being blacklisted and the token not being paused or the system stopped.

• Manager:

• • Role: The Manager is a central figure with overarching control over critical functionalities of the token.

  • Capabilities:

  • • Upgrade the contract using _authorizeUpgrade.

    • Set or remove addresses from the blacklist using setBlacklist.

    • Assign or revoke minter status using setMinter.

    • Pause or unpause token transfers using pause and unpause.

    • Mint new tokens via mint.

    • Recall tokens from one account to another using recall.

    • Freeze or unfreeze tokens in an account using freeze and unfreeze.

The total Documentation Quality score is 5 out of 10.

• Functional requirements are partially missed.

• • Project overview is basic.

  • Roles in the system are adequately described.

  • Use cases are not explicitly described.

  • For each contract, key features are moderately detailed.

  • Interactions within the system are basically outlined.

• Technical description is not provided.

• • Run instructions are provided.

  • Technical specification is not provided.

  • NatSpec documentation is not included.

The total Code Quality score is 9 out of 10.

• The development environment is configured.

• Solidity Style Guide violations.

Code coverage of the project is 69.23% (branch coverage).

• Deployment and basic user interactions are covered with tests.

• Negative cases coverage is partially missed.

• Interactions by several users are tested.

Upon auditing, the code was found to contain 0 critical, 0 high, 1 medium, and 1 low severity issues, leading to a security score of 9 out of 10. After addressing findings during the initial review, the security score was subsequently raised to 10 out of 10.

All identified issues are detailed in the “Findings” section of this report.

The comprehensive audit of the customer's smart contract yields an overall score of 8.1. This score reflects the combined evaluation of documentation, code quality, test coverage, and security aspects of the project.

The scope of the project includes the following smart contracts from the provided repository:

Contracts in Scope