Kinetiq — Exchange rate implementation not used in token operations

Source & credit. Reproduction of a public audit finding curated by AuditVault — the original finding: 58615-h-07-exchange-rate-implementation-not-used-in-token-operatio. Standalone Foundry PoC and full write-up: 58615-h-07-exchange-rate-implementation-not-used-in-token-operatio_exp in the evm-hack-registry mirror.

Vulnerability classes: vuln/cross-contract-state-consistency · reward-accounting

Reproduction: a self-contained Foundry PoC that compiles & runs in an isolated project with only forge-std — no fork, no RPC, no anvil_state. Full trace: output.txt. PoC: test/58615-h-07-exchange-rate-implementation-not-used-in-token-operatio_exp.sol.

AuditVault taxonomy: severity/high · sector/staking · cross-contract-state-consistency · use-reentrancy-guard

Key info#


Impact	HIGH — 1:1 mint/redeem ignores `getExchangeRatio`; after slash, redeem overpays and drains protocol
Protocol	Kinetiq — StakingManager
Vulnerable code	`stake` mints `msg.value` 1:1; withdraw pays 1:1
Bug class	Exchange-rate API unused in ops
Finding	Pashov Audit Group · Kinetiq 2025-02-26 · #58615 · H-07
Report	Kinetiq-security-review_2025-02-26
Source	AuditVault
Status	Audit finding. Reproduced as a standalone local PoC.
Compiler	`^0.8.24` (PoC)

TL;DR#

getExchangeRatio / kHYPEToHYPE / HYPEToKHYPE implement NAV-based rates.
stake() still does kHYPE.mint(msg.sender, msg.value) (1:1).
Withdraw pays 1 HYPE per kHYPE instead of kHYPEToHYPE.
After 10 HYPE slash on 100 staked, ratio is 0.9 but redeem of 100 kHYPE pays 100 instead of 90.
Protocol loss of 10 HYPE. Fix: mint/burn via conversion helpers.

The vulnerable code#

SOLIDITY

kHYPE.mint(msg.sender, msg.value); // @> VULN
// FIX: kHYPE.mint(msg.sender, HYPEToKHYPE(msg.value));

Root cause#

Accounting views and state transitions diverged. The ratio reflects rewards/slashing, but share mint and redeem paths hardcode 1:1, so NAV changes do not adjust user claims.

Preconditions#

Exchange rate has moved off 1:1 (slashing or rewards).
User redeems (or stakes) under the 1:1 path.

Attack walkthrough#

Stake 100 HYPE → 100 kHYPE minted.
Report slash 10 → ratio 0.9; fair redeem of 100 kHYPE = 90 HYPE.
Buggy withdraw pays 100 HYPE → 10 HYPE protocol loss.

Diagrams#

flowchart TD A["stake 100 HYPE"] --> B["mint 100 kHYPE 1:1"] B --> C["slash 10 HYPE"] C --> D{"getExchangeRatio = 0.9"} D --> E["withdraw 100 kHYPE"] E --> F["pays 100 HYPE not 90"] F --> G["protocol loss 10 HYPE"]

Impact#

Protocol and remaining stakers subsidize redeemers after negative PnL (and inverse distortion after rewards). Share supply no longer tracks economic claim on HYPE.

Sources#

AuditVault finding #58615
Pashov Kinetiq review 2025-02-26
Reduced source: kinetiq-research/lst @ c83aa17 — StakingManager.stake mint line

Sources & further analysis#

Reproductions & code

Standalone PoC + full trace: 58615-h-07-exchange-rate-implementation-not-used-in-token-operatio_exp (evm-hack-registry mirror).
AuditVault finding: 58615-h-07-exchange-rate-implementation-not-used-in-token-operatio.

Alerts & third-party analyses

Web3Sec X hacked database: search.
Rekt leaderboard: search.
Solodit incident search: search.

These dashboards index community alerts tweets, post-mortems, and independent write-ups. Reach them through the protocol name above to cross-check this reproduction against other analyses.

Source-level debugger — step opcodes and Solidity in sync