Paribus

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

Paribus is a cross-chain borrowing and lending protocol for NFTs, liquidity positions, and synthetic assets, powered by the Cardano blockchain.

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

The Paribus Protocol is an Ethereum smart contract for supplying or borrowing assets. Through the pToken contracts, accounts on the blockchain supply capital (Ether or ERC-20 tokens) to receive pTokens or borrow assets from the protocol (holding other assets as collateral).

The Paribus pToken contracts track these balances and algorithmically set interest rates for borrowers. The core contracts of the system are the following;

• PToken, PErc20 and PEther - The Paribus pTokens, which are self-contained borrowing and lending contracts. PToken contains the core logic and PErc20 and PEther add public interfaces for Erc20 tokens and Ether, respectively. Each PToken is assigned an interest rate and risk model (see InterestRateModel and Comptroller sections), and allows accounts to *mint* (supply capital), *redeem* (withdraw capital), *borrow* and *repay a borrow*. Each PToken is an ERC-20 compliant token where balances represent ownership of the market.

• Comptroller - The risk model contract, which validates permissible user actions and disallows actions if they do not fit certain risk parameters. For instance, the Comptroller enforces that each borrowing user must maintain a sufficient collateral balance across all pTokens.

• Paribus (PBX) - The Paribus Governance Token (PBX).

• InterestRateModel - Contracts which define interest rate models. These models algorithmically determine interest rates based on the current utilization of a given market (that is, how much of the supplied assets are liquid versus borrowed).

• Careful Math - Library for safe math operations.

• ErrorReporter - Library for tracking error codes and failure conditions.

• Exponential - Library for handling fixed-point decimal numbers.

• SafeToken - Library for safely handling Erc20 interactions.

• WhitePaperInterestRateModel - Initial interest rate model, as defined in the Whitepaper. This contract accepts a base rate and slope parameter in its constructor.

The architecture of the project is described as the following in the litepaper:

Privileged roles

Roles defined in the system are the following:

• Lenders - The lender is key in any DeFi platform. Most of the time these users are known as “HODLers” within the cryptocurrency space. They have no plans to outright sell their crypto assets. Paribus will be an additional outlet for this user group to earn a passive income while their underlying assets appreciate in value over time. Lenders can be thought of as liquidity providers within the ecosystem and earn interest in return for doing so. The platform will provide Deposit APR(%) based on factors such as utilization rate. Lenders can at a rough level estimate their earnings based on the Deposit APR(%) for a given asset.

• Borrowers - Paribus will operate strictly as a collateralized loan platform. Meaning any borrower must deposit asset(s) in order to borrow against. As a result borrowers are indirectly also liquidity providers to assure the platform is sustainable and self-sufficient. Every borrower is subject to paying a small one-time fixed platform fee as well as the interest accrued over the period of the loan. The fee mechanism is detailed in the latter section of this paper.

• Admin - Admins can change proxies implementations to a deployed contract address and change the contract behavior by delegating calls to the new implementation address.

• Pause Guardian - Can pause certain actions as a safety mechanism. Actions which allow users to remove their own assets cannot be paused.

• Borrow Cap Guardian - Can set borrow caps to any number for any market. Lowering the borrow cap could disable borrowing on the given market.

Recommendations

• The system relies on the security of the Admin's private keys, which can impact the execution flow and security of the funds. We recommend this account to be at least ⅗ multi-sig.

The total Documentation quality score is 10 out of 10.

• Functional requirements are available and detailed.

• The differences between Paribus and Compound are visible in the documents provided exclusively for Paribus.

The total Code quality score is 9 out of 10.

• An outdated compiler version is used.

Code coverage of the project is 71.7% (branch coverage).

• Deployment and basic user interactions are covered with tests.

• Not all negative cases/exceptions/reverts are tested.

• Interactions with several users are not tested thoroughly.

Upon auditing, the code was found to contain 0 critical, 4 high, 4 medium, and 12 low severity issues. Out of these, 13 issues have been addressed and resolved, leading to a Security score of 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 8.7. 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: