Kinetiq — Exchange rate calculation is incorrect

Source & credit. Reproduction of a public audit finding curated by AuditVault — the original finding: 58616-h-08-exchange-rate-calculation-is-incorrect-pashov-audit-gro. Standalone Foundry PoC and full write-up: 58616-h-08-exchange-rate-calculation-is-incorrect-pashov-audit-gro_exp in the evm-hack-registry mirror.

Vulnerability classes: vuln/reward-accounting · reward-calculation · fix-arithmetic

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/58616-h-08-exchange-rate-calculation-is-incorrect-pashov-audit-gro_exp.sol.

AuditVault taxonomy: severity/high · sector/staking · reward-accounting · reward-calculation · variant · math-is-safe · fix-arithmetic

Key info#


Impact	HIGH — multi-manager setup mixes local stake with global PnL → wrong, divergent rates and mispriced redemptions
Protocol	Kinetiq — StakingManager + ValidatorManager
Vulnerable code	`getExchangeRatio` local `totalStaked` + global rewards / global supply
Bug class	Cross-instance accounting inconsistency
Finding	Pashov Audit Group · Kinetiq 2025-02-26 · #58616 · H-08
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#

Multiple StakingManagers share one ValidatorManager (global rewards/slashing) and one kHYPE.
Each manager stores local totalStaked / totalClaimed.
getExchangeRatio = (localStaked + globalRewards - localClaimed - globalSlash) / globalSupply.
With SM1=50, SM2=150, rewards=20, supply=200: SM1→0.35, SM2→0.85, true→1.1.
Redeeming via SM1 shortchanges users (50 kHYPE → 17.5 vs fair 55). Fix: global stake/claim totals.

The vulnerable code#

SOLIDITY

uint256 totalHYPE = totalStaked + totalRewards - totalClaimed - totalSlashing; // @> VULN
// totalStaked/totalClaimed LOCAL; rewards/slashing GLOBAL; supply GLOBAL
return (totalHYPE * 1e18) / kHYPESupply;

Root cause#

PnL is protocol-global but stake/claim counters are per-manager. Dividing a hybrid numerator by global supply yields a rate that is neither the manager's local NAV nor the protocol NAV — and differs across managers whenever local stakes differ.

Preconditions#

≥2 StakingManagers sharing ValidatorManager + kHYPE.
Global rewards or slashing non-zero.
Local stakes unequal (divergence) or even equal (both wrong vs true global).

Attack walkthrough#

UserA stakes 50 on SM1; UserB stakes 150 on SM2.
ValidatorManager reports 20 rewards.
SM1 ratio 0.35e18, SM2 0.85e18, correct 1.1e18.
kHYPEToHYPE(50) on SM1 = 17.5 vs fair 55 → 37.5 shortfall.

Diagrams#

flowchart LR SM1["SM1 local stake 50"] --> R1["ratio 0.35"] SM2["SM2 local stake 150"] --> R2["ratio 0.85"] VM["VM global rewards 20"] --> R1 VM --> R2 True["true NAV 1.1"] -.->|"should be"| R1 True -.->|"should be"| R2

Impact#

Incorrect kHYPE valuation per manager, arbitrage between managers, and systematic under/over-payment on redemptions relative to true protocol NAV. Shared rewards are double-counted or under-attributed depending on local stake share.

Sources#

AuditVault finding #58616
Pashov Kinetiq review 2025-02-26
Reduced source: kinetiq-research/lst @ c83aa17 — StakingManager.getExchangeRatio

Sources & further analysis#

Reproductions & code

Standalone PoC + full trace: 58616-h-08-exchange-rate-calculation-is-incorrect-pashov-audit-gro_exp (evm-hack-registry mirror).
AuditVault finding: 58616-h-08-exchange-rate-calculation-is-incorrect-pashov-audit-gro.

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