Venus

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

Venus is a decentralized finance (DeFi) algorithmic money market protocol on BNB Chain. Decentralized lending pools are very similar to traditional lending services offered by banks, except that they are offered by P2P decentralized platforms. Users can leverage assets by borrowing and lending assets listed in a pool. Lending pools help crypto holders earn a substantial income through interest paid on their supplied assets and access assets they don't currently own without selling any of their portfolio.

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

Venus Protocol (“Venus”) is an algorithmic-based money market system designed to bring a complete decentralized finance-based lending and credit system.

Venus enables users to utilize their cryptocurrencies by supplying collateral to the network that may be borrowed by pledging over-collateralized cryptocurrencies. This creates a secure lending environment where the lender receives a compounded interest rate annually (APY) paid per block, while the borrower pays interest on the borrowed cryptocurrency.

The Venus Protocol has been designed to give platform users a decentralized and secure marketplace to take out loans, earn an interest, and mint synthetic stablecoins.

The files tested in the audit’s scope:

• BaseJumpRateModelV2.sol - base contract for JumpRateModelV2.sol.

• Comptroller.sol - the Comptroller contract is the central contract for each lending pool. It contains functionality central to the borrowing activity in the pool, such as supplying and borrowing assets and liquidations. Configuration values for the pool, such as the liquidation incentive, close factor, and collateral factor, can be set and retrieved from the Comptroller. Account liquidity and positions can be retrieved from the Comptroller.

• ComptrollerInterface.sol - interface for Comptroller.sol.

• ComptrollerStorage.sol - storage for Comptroller.sol.

• ErrorReporter.sol - stores error codes for VToken.sol.

• ExponentialNoError.sol - exponential module for storing fixed-precision decimals.

• JumpRateModelFactory.sol - is a factory to deploy the jump rate interest rate model. When using this model, interest follows a linear curve until supply or demand reaches the kink, after which there is a steep increase in interest rates.

• VTokenProxyFactory.sol - when adding a market to pools, VTokenProxyFactory is deployed for each market. It is the token that represents the underlying supplied asset.

• WhitePaperInterestRateModelFactory.sol - is another interest rate model that can be deployed with a market. It is similar to the jump rate model but uses a base rate and does not include a kink.

• AccessControlManager.sol - grants account access to call specific functions on contracts. This contract is responsible for granting and revoking those permissions. It provides a getter to check if an address is allowed to call a specific function.

• InterestRateModel.sol - base interest rate model contract.

• IPancakeswapV2Router.sol - interface for interacting with PancakeswapV2Router.

• JumpRateModelV2.sol - compound's JumpRateModel Contract V2 for V2 vTokens.

• PoolLens.sol - to make querying pool data easier, Isolated Pools contain a lens that queries and formats pool data. These calls can be gas intensive, so the general rule of thumb is that this contract should not be used in transactions.

• PoolRegistry.sol - Creating and managing pools is done by PoolRegistry. It can add markets to pools, update pool metadata, and return pool information.

• PoolRegistryInterface.sol - interface for PoolRegistry.sol.

• UpgradeableBeacon.sol - used in conjunction with one or more instances of BeaconProxy to determine their implementation contract, which is where they will delegate all function calls;

• RewardsDistributor.sol - users are rewarded for borrowing and lending activities with a rewards token. RewardsDistributor manages these distributions using a configurable rate.

• IProtocolShareReserve.sol - interface for ProtocolShareReserve.sol.

• IRiskFund.sol -

• ProtocolShareReserve.sol - acts as a treasury where each isolated pool can transfer their revenue.

• ReserveHelpers.sol - stores additional functionality for ProtocolShareReserve.sol and RiskFund.sol.

• RiskFund.sol - lending comes with the inherent risk that borrowers will not be able to repay their loan, which is a threat to the protocol's insolvency. Venus V4 looks to mitigate this risk with a RiskFund. A percentage of the protocol’s revenues is transferred to the RiskFund. When bad debt is detected, this fund can be auctioned off and used to cover the bad debt.

• Shortfall.sol - when bad debt is auctioned off the Shortfall contract is responsible for running the action and paying the winner.

• VToken.sol - when a user supplies a token to the protocol, they are minted vTokens to represent their supply. The VToken contract contains methods that support lending activities for the asset including lending, borrowing and liquidating.

• VTokenInterfaces.sol - stores interfaces and storage variables for VToken.sol.

• WhitePaperInterestRateModel.sol - WhitePaperInterestRateModel is an interest rate model that can be deployed with markets . It is similar to JumpRateModel except it does not include a kink. Instead, it contains a fixed base rate.

• AccessControlled.sol - access control manager contract.

• MaxLoopsLimitHelper.sol - Limit for the loops to avoid the DOS.

Privileged roles

• VToken.sol:

• • owner \- can set a new AccessControlManager and sweep accidental ERC-20 transfers to this contract.

  • shortfall \- updates bad debt (Called only when bad debt is recovered from auction).

  • comptroller \- can call the method healBorrow() which will repay a certain amount of debt, treat the rest of the borrow as bad debt, essentially "forgiving" the borrower and forceLiquidateBorrow() to liquidate the borrower's collateral.

  • AccessControlManager privilege roles:

  • • setProtocolSeizeShare() method caller - can set protocol share accumulated from liquidations

    • setReserveFactor() method caller - can set a new reserve factor for the protocol after accruing interest

    • setInterestRateModel() method caller - can update the interest rate model after accruing interest

• Comptroller.sol:

• • owner \- can set the closeFactor to use when liquidating borrows, can add a new RewardsDistributor and initialize it with all markets, can set a new PriceOracle for the Comptroller.

  • vToken \- allowed to call the method preBorrowHook() on borrows.

  • poolRegistry \- can add the market to the markets mapping and set it as listed.

  • AccessControlManager privilege roles:

  • • setCollateralFactor() method caller - can set collateralFactor for a market (collateralFactorMantissa - multiplier representing the most one can borrow against their collateral in this market and liquidationThresholdMantissa - multiplier representing the collateralization after which the borrow is eligible for liquidation)

    • setLiquidationIncentive() method caller - can set liquidationIncentive (representing the discount on collateral that a liquidator receives)

    • setMarketBorrowCaps() method caller - can set borrow caps for the given vToken markets

    • setMarketSupplyCaps() method caller - can set the given supply caps for the given vToken markets

    • setActionsPaused() method caller - can pause/unpause specified actions

    • setMinLiquidatableCollateral() method caller - can set the minimal collateral required for regular (non-batch) liquidations.

• ProtocolShareReserve:

• • owner \- can release funds.

• RiskFund:

• • owner \- can update pool registry address, can update convertible base asset, can update PancakeSwap router address and set min amount to convert

  • shortfall \- can transfer tokens for auction

  • AccessControlManager privilege roles:

  • • swapPoolsAssets() method caller - can swap an array of pool assets into the base asset's tokens of at least a minimum amount.

• PoolRegistry:

• • owner \- The owner of the PoolRegistry contract has the capability to create a new pool and add a market to an existing pool. The owner can set the pool name and update metadata information.

• AccessControlManager:

• • owner \- The owner of the AccessControlManager can grant and revoke the role.

• Shortfall:

• • owner \- The owner of the Shortfall contract has the authority to specify the convertible base assets and the minimum pool bad debt variables. They can also set the address for the Pool Registry. Furthermore, the owner has the ability to initiate a new auction.

The total Documentation quality score is 10 out of 10.

• Functional requirements are provided.

• Technical description is provided.

• NatSpecs are generally satisfactory.

The total Code quality score is 10 out of 10.

• The development environment is configured.

• Instead of using onlyOwner modifier, direct check is used.

Code coverage of the project is 73.87% (branch coverage).

• Deployment and basic user interactions are covered with tests.

• Negative cases coverage are partially missing.

• Interactions with several users are not tested thoroughly.

• Some contracts are not fully tested.

Upon auditing, the code was found to contain 0 critical, 9 high, 11 medium, and 13 low severity issues. Out of these, 29 issues have been addressed and resolved, leading to a security score of 9 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 8.4. 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