Folks Finance: swapped stable-borrow indexes turn a 200 debt into 50 and release 80 more

Source & credit. Reproduction of a public audit finding curated by AuditVault — the original finding: 61079-wrong-borrow-balance-calculation-in-the-getloanliquidity-fun. Standalone Foundry PoC and full write-up: 61079-wrong-borrow-balance-calculation-in-the-getloanliquidity-fun_exp in the evm-hack-registry mirror.

Vulnerability classes: vuln/logic/incorrect-order-of-operations · vuln/logic/liquidation-logic

Key info#

Field	Value
Loss	80 USD drawn from lender cash while the true debt is already 200 against 150 of collateral
Vulnerable contract	`LoanManager.calcStableBorrowBalance`
Attacker EOA	`0x6107900000000000000000000000000000000001`
Attack contract	`Exploit`
Attack tx	`Exploit.run()`
Chain / block / date	Ethereum model · block 0 · 2024-08
Compiler	solc 0.8.27, cancun, via IR
Bug class	`calcBorrowBalance` is called with the old index first

TL;DR#

calcBorrowBalance expects (balance, newIndex, oldIndex). calcStableBorrowBalance passes the stored index first and the updated index second. A year at 100 percent should turn 100 of principal into 200. The swapped call returns 50. Collateral of 150 then allows another 80 to be borrowed, and liquidation reverts as over-collateralized. The corrected order reports 200 and the extra borrow reverts.

Background#

Immunefi Boost Folks Finance report 34122, submitted 5 August 2024 by Nyksx. updateLoanBorrowInterests already calls calcBorrowBalance with the new index first. getLoanLiquidity does not, so stable loans look healthier as interest accrues.

The vulnerable code#

SOLIDITY

uint256 stableBorrowInterestIndex = MathUtils.calcBorrowInterestIndex(
    loanInterestRate, loanInterestIndex, stableBorrowChangeDelta
);
// @> VULN: loanInterestIndex is the old index, so calcBorrowBalance divides the debt by the updated index
return balance.calcBorrowBalance(loanInterestIndex, stableBorrowInterestIndex);

calcBorrowInterestIndex returns 2e18 from a stored index of 1e18. Dividing by that index yields half the principal.

Root cause#

The updated index and the stored index are passed in the opposite order from updateLoanBorrowInterests.

Preconditions#

A stable borrow with principal 100, index 1e18, and rate 1e18.
One year of elapsed time stored on the loan.
Collateral value 150 and 200 of lender cash in the pool.

Attack walkthrough#

debtOf builds the new index and calls calcBorrowBalance with the indexes swapped. The result is 50.
The same numbers in the correct order are 200, which is already above collateral.
borrow(80) uses the view of 50, so 50 + 80 fits under 150. 80 USD is transferred.
liquidate reads the swapped debt again and reverts OverCollateralizedLoan. Collateral stays.
The fixed manager reverts the borrow and leaves the 200 in the pool.

Diagrams#

flowchart TD A["One year doubles the stable index"] --> B["VULN passes the old index first"] B --> C["Debt views as 50 instead of 200"] C --> D["Borrow 80 against 150 of collateral"] D --> E["Liquidation reverts as over-collateralized"] E --> F["80 USD leaves the lender pool"]

Sources & further analysis#

Reproductions & code

Standalone PoC + full trace: 61079-wrong-borrow-balance-calculation-in-the-getloanliquidity-fun_exp (evm-hack-registry mirror).
AuditVault finding: 61079-wrong-borrow-balance-calculation-in-the-getloanliquidity-fun.

Alerts & third-party analyses

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

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