Audit name:
[L1] Elys | Elys Network | Nov24
Date:
Apr 7, 2025
Table of Content
Introduction
We express our gratitude to the Elys team for the collaborative engagement that enabled the execution of this Blockchain Protocol Security Assessment.
Elys Network is a versatile DeFi platform built on the Cosmos SDK, offering a comprehensive suite of financial tools including AMMs, perpetual futures trading, leveraged liquidity pools, and stablecoin staking. It prioritizes a secure and transparent environment where users control their assets and participate in governance. With its modular design, Elys seamlessly integrates new features like trade shield, token deflation, and accounted pools, ensuring adaptability within the evolving DeFi landscape.
Document | |
|---|---|
| Name | Blockchain Protocol Review and Security Analysis Report for Elys |
| Audited By | Tanuj Soni, Reza Mir |
| Approved By | Nino Lipartiia |
| Website | https://elys.network/→ |
| Changelog | 13/12/2024 - First Preliminary Report |
| 24/01/2025 - Second Preliminary Report | |
| 29/01/2025 - Third Preliminary Report | |
| 07/03/2025 - Final Report | |
| Platform | Elys Network |
| Language | Golang |
| Tags | Cosmos, IBC, Perpetual Trading, DeFi, Staking, Stablestake, Leverage LP |
| Methodology | https://hackenio.cc/blockchain_methodology→ |
Document
- Name
- Blockchain Protocol Review and Security Analysis Report for Elys
- Audited By
- Tanuj Soni, Reza Mir
- Approved By
- Nino Lipartiia
- Website
- https://elys.network/→
- Changelog
- 13/12/2024 - First Preliminary Report
- 24/01/2025 - Second Preliminary Report
- 29/01/2025 - Third Preliminary Report
- 07/03/2025 - Final Report
- Platform
- Elys Network
- Language
- Golang
- Tags
- Cosmos, IBC, Perpetual Trading, DeFi, Staking, Stablestake, Leverage LP
- Methodology
- https://hackenio.cc/blockchain_methodology→
Review Scope | |
|---|---|
| Repository | https://github.com/elys-network/elys/→ |
| Commit | 99bd50ba942ef856291aec1705e0d3acded58444 |
Review Scope
- Repository
- https://github.com/elys-network/elys/→
- Commit
- 99bd50ba942ef856291aec1705e0d3acded58444
Audit Summary
The system users should acknowledge all the risks summed up in the risks section of the report.
Documentation quality
User-facing documentation for features and use cases is well-organized and readily accessible.
Each custom module in the x directory is supported by detailed documentation, including READMEs, conceptual overviews, usage guides, keeper descriptions, and protobuf definitions.
However, several modules have outdated documentation that requires revisions to reflect the current implementation accurately.
The documentation lacks clarity on module interactions, particularly the integration of the AMM, Oracle pool, and perpetual module, as well as the execution and settlement processes for perpetual and spot orders.
Guides for setting up a local network using Docker or Ignite are available but require updates to address compatibility and build issues.
Documentation on off-chain components, such as the
PriceFeeder, could be enhanced to include plans for decentralization and security measures as the Elys team transitions to the OjO network. Additionally, dependencies on third-party protocols, such as distributed oracles, should be thoroughly documented.IBC Documentation: Cross-chain (IBC) integration processes require expanded documentation.
Code quality
The codebase adheres to Go programming best practices, supporting maintainability and optimal performance.
Custom modules include test cases; however, expanding coverage and diversifying scenarios would strengthen security and stability.
Certain functions exhibit high cyclomatic complexity, excessive length, and deeply nested structures, highlighting opportunities for refactoring.
Architecture quality
Elys Network utilizes the Cosmos SDK, a mature and widely-adopted framework for building blockchains, contributing to a robust technical foundation.
The Elys Network project exhibits a pragmatic architectural approach by inheriting and adapting complex modules from established projects like Osmosis and Evmos. This strategy accelerates development and leverages proven components for enhanced reliability.
The overall architecture quality is modular and pragmatic, prioritizing efficiency and leveraging existing solutions.
The architecture and design of external price feed to the system must be improved to ensure feeds are tamper-proof.
System Overview
Elys Network is a DeFi platform built using the Cosmos SDK and featuring a range of custom modules extending its core functionalities. This overview prioritizes the description of these custom modules and their interactions.
estaking: Adds liquid staking, and burns EdenB tokens based on Elys staking changes.
leveragelp: Enables leveraged liquidity pool positions (higher risk/reward).
amm: Handles swaps via multiple pool types (standard, oracle), integrates with leveragelp/accountedpool, charges creation fees.
accountedpool: Tracks pool balances for shielded AMM pools and impermanent loss protection.
perpetual: Enables leveraged perpetual contracts with funding rates and liquidations.
tradeshield: Security layer against trading exploits.
transferhook: Enables IBC transfers with built-in token swaps.
assetprofile: Manages asset-specific settings.
parameter: Governance-controlled system parameter updates.
oracle: Provides asset price feeds for valuations/liquidations.
stablestake: Manages stablecoin staking/loans with dynamic rates.
tier: User tiers with activity-based benefits.
tokenomics: Controls token distribution/incentives.
commitment: Manages user commitments and token locks.
burner: Burns tokens regularly via epoch triggers.
epochs: Schedules timed events/triggers.
masterchef: Distributes liquidity provider rewards.
Risks
Due to the active development of the protocol, new features and code changes are continuously introduced. These ongoing modifications may inadvertently introduce vulnerabilities or inconsistencies that fall outside the scope of this audit.
Findings
Code ― | Title | Status | Severity | |
|---|---|---|---|---|
| F-2025-8500 | Critical MEV Vulnerability in TradeShield's Order Execution | mitigated | Critical | |
| F-2025-8461 | Inadequate Protections Against Funding Rate Manipulation | mitigated | High | |
| F-2025-8217 | Missing Liquidator Reward Implementation in Perpetual Trading System | fixed | High | |
| F-2024-7600 | Price Exploitation from Missing On-Chain TWAP Enforcement | mitigated | High | |
| F-2024-7467 | Vulnerable Dependencies | fixed | High | |
| F-2024-7593 | Price Manipulation and Feeder Centralization Risks | fixed | Medium | |
| F-2025-8435 | Insufficient Slippage Protection in IBC-Triggered Swaps | accepted | Low | |
| F-2025-8434 | Insufficient Market-Specific Leverage Limits and Missing Authority Controls | fixed | Low | |
| F-2025-8341 | Division by Zero Leading to Potential Panics | fixed | Low | |
| F-2025-8268 | Insufficient Protections in Elys Protocol AMM Logic | accepted | Low |
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/elys-network/elys/→ |
| Commit | 99bd50ba942ef856291aec1705e0d3acded58444 |
Scope Details
- Repository
- https://github.com/elys-network/elys/→
- Commit
- 99bd50ba942ef856291aec1705e0d3acded58444
Components in Scope
Cosmos SDK Core App
Cosmos fork review
RPC
Cryptography and keys
Custom Modules:
x/accountedpool
x/commitment
x/masterchef
x/stablestake
x/transferhook
x/amm
x/epochs
x/oracle
x/tier
x/assetprofile
x/estaking
x/parameter
x/tokenomics
x/burner
x/leveragelp
x/perpetual
x/tradeshield