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MCDEX Mai Protocol Audit

Monte Carlo Decentralized Exchange is a decentralized derivatives exchange. Mai Protocol V2 is a system that allows users to trade trust-minimized Perpetual Futures contracts on the Ethereum blockchain. Users can either trade with each other or trade against the Automated Market Maker smart contract. In this audit, we reviewed the smart contracts within this system. The audited commit is 4b198083ec4ae2d6851e101fc44ea333eaa3cd92 and the scope includes all production contracts in the contracts directory. The contracts in the test directory were not included.

Additionally, it should be noted that the system design includes a number of economic arguments and assumptions. These were explored to the extent that they clarified the intention of the code base, but we did not audit the mechanism design itself.

All external code and contract dependencies were assumed to work as documented.

Update: All issues listed below have been fixed or accepted by the Monte Carlo team. In contrast to our recommendation, many fixes were committed simultaneously alongside code refactors, which made it harder to consider the issues and their mitigations in isolation. Instead, we reviewed the expected code segments in the final commit for each issue, and disregarded all other changes to the code base.

Here we present our findings, along with the updates for each of them.


Overall, we are satisfied with the design and health of the code base. We are pleased to see the use of mostly small, encapsulated functions and isolated contracts. We also congratulate the MCDEX team for supporting innovative designs that encourage decentralization and user control, as well as recognizing the risks associated with the privileged roles in the system.

Our main concern is the lack of function-level documentation and a noticeable absence of comments, particularly for a project of this complexity. Although the external documentation was very helpful, we believe introducing comprehensive function-level documentation throughout the code base will make it significantly easier to understand, reason about, maintain and update.

Update: The Monte Carlo team have greatly improved the comments and documentation.

System overview

Users of the Mai Protocol V2 can open leveraged positions that track the price of the supported asset pairs. After depositing sufficient collateral, they are able to trade LONG or SHORT positions that will benefit from increasing or decreasing prices of the underlying asset respectively. These positions can also be leveraged to increase volatility.

In the event a user becomes over-leveraged, their position can be liquidated by any other trader. The liquidator effectively buys the over-leveraged positions and the liquidated position incurs a penalty that is partly sent to the liquidator and partly sent to the global insurance fund. If a liquidated user is unable to cover their debt, the insurance fund covers the difference. If the insurance fund is empty, further losses get socialized among the traders who hold the opposite position.

One interesting component of the system is the Automated Market Maker (AMM) contract, which holds LONG positions and collateral. Liquidity providers can deposit additional collateral as well as LONG contracts (technically they sell the AMM LONG contracts and retain rights over those positions) to increase the depth of the market. In exchange, they will receive ERC20 tokens corresponding to their share of the liquidity pool. Users of the AMM contribute fees to the pool, which means the token holders receive trading fees until they withdraw their liquidity. Naturally, since they are ERC20 tokens, the liquidity providers can also trade these tokens directly.

Once the AMM is funded, any user can trade LONG positions with this contract at deterministically generated prices. Whenever the AMM price deviates appreciably from the oracle price, collateral is transferred from LONG to SHORT position holders or vice versa (whether or not they obtained their position through the AMM) to incentivize correcting the imbalance, in a process known as funding. In this way, the AMM provides a completely on-chain mechanism for users to trade perpetual contracts.

To avoid nullifying trades that were submitted to the order book, traders cannot simultaneously trade through the order book and the AMM. They can choose either option whenever desired, but there is a short delay in the transition where their account may not be fully functional.

Update: The trading limitation and delay have been removed.

Privileged roles

Many of the contracts have privileged roles that can significantly affect the usefulness and safety of the system. For instance:

  • the PerpetualProxy contract has privileged access to make deposits, withdrawals and trades on behalf of any user. Naturally, the smart contract itself cannot abuse this power but any malicious user with the same role could. The system should be configured to prevent this possibility.
  • the Perpetual administrator has control over all of the governance parameters, including the leverage amount, the fees and all penalty rates.
  • the Perpetual administrator can update the contract that manages safety time locks, can set the address that receives development fees, or can even replace the entire AMM.
  • the Perpetual administrator can withdraw directly from the insurance fund.
  • the Perpetual administrator can put the contract in an emergency settlement mode, where they can set the price of a futures contract and adjust all user balances.
  • the AMM administrator can control the funding rate parameters and the fee rates.

Users of the protocol will need to trust the administrators to use these powers fairly and wisely.

Ecosystem dependencies

As the ecosystem becomes more interconnected, understanding the external dependencies and assumptions has become an increasingly crucial component of system security. To this end, we would like to discuss how the financial contracts depend on the surrounding ecosystem.

Most importantly, the AMM uses Chainlink to obtain the price of the underlying asset. If this dependency becomes corrupted, it could be used to steal funds within the system. In some cases (for instance, if the oracle provides inconsistent timestamps), it could disable the whole protocol. During this audit, we assumed that the chainlink oracle will be available and reliable.

Additionally, the system uses time-based logic to calculate the AMM funding. Very long delays between updates to the funding calculation (for instance, during periods of high Ethereum congestion) would increase the gas costs of the subsequent updates, potentially to a prohibitive degree.

Critical severity

[C01] Anyone can liquidate on behalf of another account

The Perpetual contract has a public liquidateFrom function that bypasses the checks in the liquidate function.

This means that it can be called to liquidate a position when the contract is in the SETTLED state. Additionally, any user can set an arbitrary from address, causing a third-party user to confiscate the under-collateralized trader’s position. This means that any trader can unilaterally rearrange another account’s position. They could also liquidate on behalf of the Perpetual Proxy, which could break some of the Automated Market Maker invariants, such as the condition that it only holds LONG positions.

Consider restricting liquidateFrom to internal visibility.

Update: Fixed. The liquidateFrom function has been removed.


[C02] Orders cannot be cancelled

When a user or broker calls cancelOrder, the cancelled mapping is updated, but this has no subsequent effects. In particular, validateOrderParam does not check if the order has been cancelled.

Consider adding this check to the order validation to ensure cancelled orders cannot be filled.

Update: Fixed. The validation now checks the cancellation status.

High severity

[H01] Incorrect social loss

When a bankrupt position is liquidated and the insurance fund is empty, the opponent position holders should cover the loss. In this way, the profits on one side are garnished to fund the loss on the other side. This ensures the system as a whole cannot become insolvent. However, the loss is actually attributed to positions on the same side. In the worst case, none of the positions on the same side will be able to cover the loss, which means the contract will be underfunded and some profits will not be redeemable. Consider updating the code to assign losses to the opposite side of the liquidation.

Update: Fixed.

Medium severity


[M01] liquidateFrom does not use tradingLotSize

In the Perpetual contract, within the function liquidateFrom there is a check that the maxAmount to be liquidated is a multiple of lotSize. This may be the amount of some user’s position that gets liquidated by the end of the function call.

However, all trades which happen during a call to matchOrders must be for an amount that is a multiple of tradingLotSize. This is the only way to trade with other users. Otherwise, trading with the AMM is also limited through checks in buyFrom and sellFrom such that the user can only trade amounts that are a multiple of tradingLotSize.

In the PerpetualGovernance contract, we can see that tradingLotSize must be a multiple of lotSize. If these two numbers differ, and a user is liquidated for an amount not divisible by tradingLotSize, they may have a left-over position that is not an even multiple of tradingLotSize. If this occurs, they may not be able to close their position completely.

Consider restricting liquidation amounts to multiples of tradingLotSize, rather than lotSize. Alternatively, consider providing a method for liquidated traders to close their positions that are of less than tradingLotSize.

Update: Acknowledged. Typically, lotSize and tradingLotSize will be the same value, but tradingLotSize might be increased to help with high Ethereum congestion.

[M02] Unspecified parameters

When a user liquidates another position, they specify the maximum position amount to liquidate. However, the liquidation price and position side is inferred contextually from the current mark price and the state of the target account. These values could change before the liquidation is confirmed, particularly during periods of high Ethereum congestion. In many cases the liquidator would accept any successful liquidation, but for the sake of predictability, consider allowing the liquidator to specify an acceptable price range, the side of the positions to liquidate and a deadline for when the liquidation attempt expires.

Similarly, when creating the AMM pool, adding liquidity or removing liquidity, the price is inferred contextually. In the case of adding or removing liquidity, it could even change based on the actions of other users in the same block. Consider allowing the user to specify an acceptable price range and a deadline for when the action expires.

Update: Acknowledged. The Monte Carlo team have decided not to address this issue.

[M03] Re-entrancy possibilities

Solidity recommends the usage of the Check-Effects-Interaction Pattern to avoid potential security issues, such as reentrancy. However, there are several examples of interactions preceding effects:

It should be noted that even when a correctly implemented ERC20 contract is used for collateral, incoming and outgoing transfers could execute arbitrary code if the contract is also ERC777 compliant. These re-entrancy opportunities are unlikely to corrupt the internal state of the system, but they would effect the order and contents of emitted events, which could confuse external clients about the state of the system. Consider always following the “Check-Effects-Interactions” pattern.

Update: Fixed. The ReentrancyGuard contract is now used to protect those functions.

[M04] Missing docstrings and comments

Most of the contracts and functions in the audited code base lack documentation. This hinders reviewers’ understanding of the code’s intention, which is fundamental to correctly assess not only security, but also correctness. Additionally, docstrings improve readability and ease maintenance. They should explicitly explain the purpose or intention of the functions, the scenarios under which they can fail, the roles allowed to call them, the values returned and the events emitted.

Consider thoroughly documenting all functions (and their parameters) that are part of the contracts’ public API. Functions implementing sensitive functionality, even if not public, should be clearly documented as well. When writing docstrings, consider following the Ethereum Natural Specification Format (NatSpec).

Additionally, the OpenZeppelin team found a notable lack of comments throughout the audited code. Well-commented code not only improves audit speed and depth, but it also helps to reveal what developer intentions may be and thus helps identify issues of misalignment between intention and implementation. Without comments, identifying issues in the code is much more difficult. Aside from benefiting auditors, code comments also benefit future developers and users, by clearly defining the functionality of the code and by reducing the risk of bugs.

Consider thoroughly commenting the existing code, and adding regular commenting to the software development process. We specifically recommend commenting every line of assembly code and commenting all complex math operations.

Update: Fixed. Many parts of the codebase have been documented and commented.

[M05] Incomplete Denial of Service prevention

As described in the documentation, the purpose of the broker and withdraw time locks is to prevent traders nullifying trades that have already been submitted. If this were possible, it would not only disrupt their counterparty’s trade, it may also revert unrelated trades if they are processed in batches. The time locks ensure the order book has time to respond to a trader that attempts to withdraw excess collateral or make trades through the AMM or another broker. However, we have identified two other scenarios that would allow the trader to nullify their trade.

Firstly, if the trader applied to withdraw, they could set their appliedBalance to a large amount. Subsequently, when a trade is processed, claimDevFee will ensure the available margin can cover any opening fee. However, the available margin calculation does not respect the time lock, so a large appliedBalance can be used immediately to nullify the trade. Consider updating availableMarginWithPrice to check the trader’s appliedHeight before processing the appliedBalance.

Secondly, a trader can directly cancel their order. This should immediately prevent it being processed, which would nullify the trade directly. Consider preventing traders from cancelling their request directly, and instead rely on their broker to relay the cancellation.

Note: This issue is related to C02 and any mitigation should consider both issues simultaneously.

Update: Fixed with notable change to functionality. The entire timelock mechanism for brokers and withdrawals has been removed. This means there is no protection against a user nullifying a trade that was submitted to the offline order book. Importantly, this does not lead to inconsistencies within the protocol. Additionally, users can no longer choose an arbitrary broker address – they must use an address approved by the administrator (or the AMM).


[M06] Governance parameter changes should not be instant

Many sensitive changes can be made by any account with the WhitelistAdmin role via the functions setGovernanceParameter within the AMMGovernance and PerpetualGovernance contracts. For example, the WhitelistAdmin can change the fee schedule, the initial and maintenance margin rates, or the lot size parameters, and these new parameters instantly take effect in the protocol with important effects.

For example, raising the maintenance margin rate could cause isSafe to return False when it would have previously returned True. This would allow the user’s position to be liquidated. By changing tradingLotSize, trades may revert when being matched, where they would not have before the change. These are only examples; the complexity of the protocol, combined with unpredictable market conditions and user actions means that many other negative effects likely exist as well.

Since these changes are occasionally needed, but can create risk for the users of the protocol, consider implementing a time-lock mechanism for such changes to take place. By having a delay between the signal of intent and the actual change, users will have time to remove their funds or close trades that would otherwise be at risk if the change happened instantly. A simple timelock can follow the same pattern as applying for withdrawals (setting an appliedHeight, then checking it when the withdrawal is executed). If a timelock is implemented for governance parameter changes, the delay should be on the order of multiple days, to give users time to consider the effects of potential changes and act accordingly.

Update: Acknowledged. The Monte Carlo team will implement a delay in the external governance mechanism.

[M07] Undocumented Solidity assembly block

The hashOrder function uses assembly to hash an Order object. Although implemented correctly, the use of assembly discards several important safety features of Solidity, which may render the code unsafe or more error-prone. It is also harder for readers to parse, for reviewers to verify, and for developers to update.

Consider using abi.encode to achieve the same functionality. Alternatively, if the efficiency of assembly is required, consider commenting each line, including the magic constants. Additionally, the current pattern accesses unrelated memory locations and introduces low-level assumptions, such as the struct not being allocated below address 32. These should be thoroughly documented.

Update: Fixed. The assembly block has been commented.

[M08] wfrac function returns unintended value in edge case

The wfrac function in the LibMathSigned library is intended to return x * y / z. However, in the case of (x, y, z) = (1, _INT256_MIN, -1), the intended result will not be returned. This is because _INT256_MIN has a higher absolute value than the maximum representable int256 value, due to the way numbers are encoded in two’s complement format.

When t equals _INT256_MIN and z is less than 0, the negation of t will return the same value as t, _INT256_MIN.

To avoid this issue, consider replacing the implicit negation of t with the call t.neg(). The neg function will revert when called with _INT256_MIN. Consider also applying this to the implicit negation of z.

Update: Fixed. The recommended changes have been applied.

[M09] Changes to lotSize and tradingLotSize should be atomic

As discussed in issues M01 and M06, tradingLotSize and lotSize depend on each other, and cannot be changed such that tradingLotSize % lotSize != 0.

For these two dependent parameters, consider creating some function that changes both atomically.

Update: Acknowledged.

Low severity

[L01] Position size update

Whenever the UpdatePositionAccount event is emitted, the perpetualTotalSize parameter is set to the size of the LONG position, regardless of which side was updated. Although the two sides should eventually balance, the event is often emitted while they are still unbalanced:

  • when it is emitted the first time during a trade, the second position has not been updated, so the two sides will differ by the trade amount.
  • when it is emitted the first time during a liquidation, the liquidator’s position has not been updated, so the two sides will differ by the liquidation amount.
  • when it is emitted during settlement, the positions are closed in an arbitrary order, so the two sides may have different sizes.

Consider emitting the total size of the relevant position, instead of defaulting to the LONG size, which is often incorrect.

Update: Partially fixed. The liquidate function no longer emits an UpdatePositionAccount event. The remaining events now emit the total size of the relevant position.

[L02] Fragile signature verification

ECDSA signatures are inherently malleable, where it is possible to modify a valid signature to produce an equivalent signature over the same data. In Ethereum, this has been addressed for transactions, but not for ecrecover. Since LibSignature uses ecrecover directly over arbitrary inputs, it will accept these modified signatures as valid.

Additionally, ecrecover returns zero when the signature fails, but this condition is not validated in LibSignature. Therefore, it is possible to produce a valid order on behalf of the zero address.

Although neither of these edge cases can be exploited directly in the current system, it introduces unnecessary fragility. Consider importing and using the recover function from OpenZeppelin’s ECDSA library not only to benefit from bug fixes to be applied in future releases, but also to reduce the code’s attack surface.

Update: Fixed. A recover function is added in the LibSignature library to remove the reported fragilities by adding checks on s and v. This function also checks whether the returned value from ecrecover is zero. Please note that these checks are based on the OpenZeppelin’s ECDSA library recover function that is imported in the code but never used.

[L03] Overwriting cash balance

The setCashBalance function can be used to manually adjust a trader’s cash balance during the SETTLING phase. However, if a separate balance-changing transaction (such as deposit or liquidate) is confirmed first, the adjustment will not account for the new balance. Consider replacing the setCashBalance function with increaseCashBalance and decreaseCashBalance functions to avoid the possible race condition.

Update: Fixed. The setCashBalance function has been replaced by increaseCashBalance and decreaseCashBalance functions.

[L04] Erroneous docstrings and comments

Several docstrings and inline comments throughout the code base were found to be erroneous and should be fixed. In particular:

Update: Partially fixed. The NatSpec comment in LibSignature.sol and the repeated comment in AMM.sol have been fixed. However the docstring above the current* functions in the AMM.sol still mentions that current* functions are calculated based on the on-chain fundingState instead of last* functions are calculated based on the on-chain fundingState

[L05] Commented out code

The functions isEmergency and isGlobalSettled in the IPerpetualProxy contract are commented out without giving developers enough context on why those lines have been discarded, thus providing them with little to no value at all.

Similarly, the functions roundFloor and roundCeil in the LibMathSigned library are commented out.

To improve the readability of the code, consider removing the commented lines from the codebase.

Update: Fixed. Commented code has been removed from LibMathSigned. IPerpetualProxy contract has been removed altogether.

[L06] Incorrect guard condition

The guard condition that limits withdrawals from the insurance fund compares the raw token value to the scaled WAD balance. Therefore, it doesn’t actually protect against withdrawing too much. In practice, the subsequent sanity check will catch any errors. Nevertheless, for clarity, consider updating the guard condition to compare values of the same scale.

Update: Fixed. The proper check has been implemented.

[L07] Transfer of ETH may unexpectedly fail

In the _withdraw and withdrawFromProtocol functions of the Collateral contract, the transfer of Ether is executed with Solidity’s transfer function, which forwards a limited amount of gas to the receiver. Should the receiver be a contract with a fallback function that needs more than 2300 units of gas to execute, the transfer of Ether would inevitably fail. After the Istanbul hard fork, it has become a recommended practice not to use transfer to avoid hard dependencies on specific gas costs.

To avoid unexpected failures in the withdrawal of Ether, consider replacing transfer with the sendValue function available in the OpenZeppelin Contracts library.

Update: Fixed. The transfer function has been replaced with the sendValue function.

[L08] Use of arithmetic operators instead of LibMath functions

Given below is the list of occurrences in the codebase where arithmetic calculations are performed using arithmetic operators instead of using LibMath library functions:

  • In ChainlinkAdapter.sol : For calculating the newPrice, multiplication is done using the * operator rather than using the LibMathSigned.mul function
  • In InversedChainlinkAdapter.sol : For calculating the newPrice, multiplication is done using the * operator rather than using the LibMathSigned.mul function
  • In Collateral.sol : implements subtraction of decimals from MAX_DECIMALS using the - operator instead of LibMathUnsigned.sub function
  • In AMM.sol : multiplication between two integers are performed using * operator

To safeguard from code overflows, underflows and arithmetic errors, please consider using LibMath libraries. Also note that the LibMath libraries are using * and / operators instead of relying on their own safe methods. Examples can be found here and here

Update: Fixed. Suggested changes have been made.

[L09] Hard-coded order version

In the Exchange contract, the constant SUPPORTED_ORDER_VERSION is set to the value 2, but is not used in the code base. However, the function validateOrderParam ensures that the order’s version is 2.

Since it appears that these two parts of the code are related, consider using SUPPORTED_ORDER_VERSION in the guard condition. This will ensure that changing this value will impart the expected behavior, and will improve code readability and auditability.

Update: Fixed. The order version’s hardcoded value of 2 has been replaced by the SUPPORTED_ORDER_VERSION constant in the code.

[L10] Implicit input value assumption

In the LibMath library the wpowi function is assuming implicitly that n is non-negative. It actually returns the wrong answer if a negative n is used.

In order to avoid wrong returned values, consider validating the input within wpowi before executing the calculations.

Update: Fixed. The wpowi function now specifically accepts only non-negative values of n.

[L11] ShareToken contract details

The decimals, name and symbol variables of the ShareToken contract are explicitly defined. While OpenZeppelin Contracts are already used, consider using the ERC20Detailed contract, which contains the additional variables.

This would change decimals to a uint8 instead of a uint256, making it consistent with the standard.

Note that in the newest package version these details of an ERC20 contract have been included in the main contract.

Update: Fixed. ShareToken now inherits ERC20Detailed.

[L12] Unclear variable names

The variable name guy is used frequently throughout the code. To favor explicitness and readability, we suggest renaming all instances of the variable guy to trader in Collateral.sol, Position.sol, in Perpetual.sol, Exchange.sol, ContractReader.sol, PerpetualProxy.sol and AMM.sol, as well as any corresponding occurrences within interface contracts.

Additionally, in the LibMath library the _UINT256_MAX variable is declared as uint256 with value 2**255 -1. This is not actually the maximum value for uint256 variables, which is 2**256-1. This assignment makes sense since the constant is the maximum value that can be represented by an int256. Nevertheless, in order to avoid confusion for future developers, consider renaming the variable or adding a comment explaining why this is not the actual maximum representable value.

Update: Fixed. The variable guy has been renamed to trader throughout the code base and _UINT256_MAX has been renamed to _POSITIVE_INT256_MAX.

Notes & Additional Information

[N01] WhitelistedRole and ERC20Mintable removed from OpenZeppelin Contracts v3.0.0

The codebase utilizes WhitelistedRole.sol from OpenZeppelin Contracts. For example, it is imported here in GlobalConfig.sol. This contract was supported up to OpenZeppelin Contracts version 2.5.0, but beginning with version 3.0.0, it has been replaced with AccessControl.sol. Similarly, ERC20Mintable.sol, which is imported into the codebase here, no longer exists in OpenZeppelin Contracts v3.0.0.

Although the team maintaining OpenZeppelin Contracts will continue to provide support for security issues, new functionality will no longer be added to the WhitelistedRole nor the ERC20Mintable contracts. AccessControl.sol was designed with consideration for common use cases, security, and complex systems. To keep up with constantly-improving OpenZeppelin Contracts and future Solidity developments, consider updating the codebase to utilize the latest version of OpenZeppelin Contracts.

Update: Acknowledged by the Monte Carlo team.

[N02] Lack of explicit visibility

The perpetual state variable in the PerpetualProxy contract implicitly uses the default visibility.
Moreover the IPerpetualProxy interface declares a perpetual function that matches the one that is silently implemented in PerpetualProxy as the automatically generated getter.

To favor readability, consider explicitly declaring the visibility of all state variables and constants.

Update: This is not an issue anymore since the perpetual state variable has been removed along with the IPerpetualProxy contract.

[N03] Extract Order parameters

The Order struct contains a data field, which is a combination of eleven individual fields. This necessitates custom getter functions to extract the individual components. To favor simplicity and readability, consider using a data type with named variables to address the individual fields.

It should be noted that the data type can be densely packed, so the underlying storage layout would not be affected. Furthermore, the object could be cast to the existing Order struct before generating the EIP712 hash, so compliance with the standard wouldn’t require any additional complexity to handle the extra fields.

Update: Acknowledged by the Monte Carlo team. The Order struct’s data field remains unchanged, it is designed to make the Order data structure compatible with old off-chain infrastructure.

[N04] Unused OrderSignature struct

The LibEIP712 library declares an unused OrderSignature struct that is a duplicate of the one declared in the LibSignature library. To avoid confusion and inconsistencies, consider removing it.

Update: Fixed. The unused OrderSignature struct has been removed from LibEIP712 library.

[N05] Unused import statements

Consider removing the following unused imports:

The following imports are only used for their transitive imports:

Update: Partially fixed. All of the unused imports mentioned above are removed except LibOrder which is still imported in Perpetual.sol and is used in this unnecessary association.

[N06] Unused constant

In the AMM.sol contract, the constant ONE_WAD_U is declared but never used. Please consider removing it.

Update: Fixed. The unused constant ONE_WAD_U has been removed from the AMM.sol contract.

[N07] Unused return parameters

In the Perpetual contract, the liquidateFrom function is declared as returning two uint256 unnamed variables that are never returned or explicitly set inside the function.

Consider removing it from the definition to reflect the actual behavior of the function.

Update: Fixed. The function liquidateFrom has been refactored to the liquidate function which now returns two uint256 variables liquidationPrice and liquidationAmount.

[N08] Unused OrderStatus enum

Please consider removing the unused enum OrderStatus declared in Exchange.sol

Update: Fixed. The unused enum OrderStatus has been removed from Exchange.sol.

[N09] Uninformative error messages

Several error messages in require statements were found to be too generic, not accurately notifying users of the actual failing condition causing the transaction to revert. Within the following files, we identify spots where error messages could be changed for greater clarity.

  • within AMM.sol:
  • on line 156, consider using the message “amount must be divisible by lotSize”
  • on line 183, consider using the message “amount must be divisible by tradingLotSize”
  • on line 225, consider using the message “amount must be divisible by tradingLotSize”
  • on line 259, consider using the message “amount must be divisible by lotSize”
  • on line 287, consider using the message “shareBalance too low”
  • on line 622, consider using the message “time steps (n) must be positive”


  • within Brokerage.sol:

  • on line 25, consider using the message “invalid newBroker”

  • within Collateral.sol:

  • on line 123, consider using the message “negative balance”

  • within Exchange.sol:

  • on line 63, consider using the message “amounts must be divisible by tradingLotSize”
  • on line 74, consider using the message “taker initial margin unsafe”
  • on line 103, consider using the message “maker initial margin unsafe”
  • on line 119, consider using the message “amount must be divisible by tradingLotSize”
  • on line 206, consider using the message “available margin too low for fee”

  • within LibMath.sol:

  • on line 99, consider using the message “cannot convert negative ints”
  • on line 294, consider using the message “cannot convert uints greater than _UINT256_MAX

  • within Perpetual.sol:

  • on line 53, consider using the message “fallback function disabled”
  • on line 69, consider using the message “cannot deposit to 0 address”
  • on line 157, consider using the message “cannot withdraw from 0 address”
  • on line 168, consider using the message “withdrawer available margin negative”
  • on line 194, consider using the message “no ether sent”
  • on line 271, consider using the message “maxAmount must be divisible by lotSize”
  • on line 283, consider using the message “liquidator available margin negative”

Error messages are intended to notify users about failing conditions, and should provide enough information so that the appropriate corrections needed to interact with the system can be applied. Uninformative error messages greatly damage the overall user experience, thus lowering the system’s quality. Therefore, consider not only fixing the specific issues mentioned, but also reviewing the entire codebase to make sure every error message is informative and user-friendly enough.

Update: Partially fixed. Most of the listed error messages are more descriptive or no longer necessary.

[N10] Inconsistent use of return variables

There is an inconsistent use of named return variables across the entire code base. For example, here the returned variables are named but not assigned to, here they are unnamed and here they are never returned.
Consider removing all named return variables, explicitly declaring them as local variables where needed, and adding the necessary return statements where appropriate. This should improve both explicitness and readability of the project.

Update: Partially fixed. While the mentioned examples have been rectified, there are still inconsistencies in the codebase. For example, the wfrac and wpowi functions in LibMathSigned still use named return variables.

[N11] Liquidation price is not validated

The calculateLiquidateAmount function doesn’t confirm that liquidationPrice is not zero. In this scenario, the function would revert when performing a division by zero. Following the “fail early and loudly principle”, consider explicitly requiring the price to be positive.

Update: Fixed in PR#5.

[N12] Redundant condition in require

On line 30 of Collateral.sol, a require is done which checks the conditions: _collateral != address(0x0) || (_collateral == address(0x0) && decimals == 18).

It can be shown that the conditions _collateral != address(0x0) || decimals == 18 will produce the exact same result.

Consider simplifying the conditional statement to make the code smaller and more readable.

Update: Fixed. The require statement has been updated.

[N13] Misplaced state variable definitions

In the LibMath library there are some state variables declared in between two functions.

To improve readability and follow the Solidity style guide, consider positioning the state variables before the constructor.

Update: Fixed. The state variables declaration is positioned as per the suggestion.

[N14] Inconsistency between “emergency” and “settling”

In the ContractReader contract the isEmergency parameter of the PerpetualStorage struct is true only if the perpetual contract is in SETTLING mode.

Moreover the documentation clearly states that when settling, the system enters into an Emergency status where trades and withdrawals are disabled until the settlement ends.

Consider unifying the variable names in the code and documentation to improve the readability of the code and avoid confusion.

Update: Fixed. All occurrences of SETTLING have been renamed to EMERGENCY in the code base. Note that the process is still described as “settlement” and the final state is SETTLED.

[N15] Inconsistency in defining 10**18

Throughout the codebase, the use of the value 10**18 has been significant. However, there is an inconsistency in defining this value.
For example, in the LibMath library the _WAD variable is declared along with its getter as 10**18 within both LibMathSigned and LibMathUnsigned. However, LibOrder, which makes use of LibMath, declares the variable ONE as 1e18. Also, AmmGovernance uses the hardcoded 10**18 value instead of calling the WAD() function from LibMathSigned library.

Other occurrences of this value in the code are:

Given the role 10**18 has inside the system, consider defining this variable only once (or twice, if a signed and unsigned version are desired) and refactor any use to use this definition.

Update: Partially fixed. ChainlinkAdapter still uses a new constant ONE instead of the WAD() function of LibMathUnsigned library. AmmGovernance and PerpetualGovernance still use 10**18 directly.

[N16] Inconsistency in defining ‘other’ large constants

Apart from 10**18, there are several large constants defined inconsistently throughout the codebase.
For example, 10**x syntax is used in chainlinkDecimalsAdapter of ChainlinkAdapter whereas raw decimal syntax is used in fixed_1 of LibMathSigned

Other occurrences of large decimals in the code are :

To improve the readability of the code, please consider using 10**x or 1ex syntax for all the large constants that can be expressed in this form.

Update: Partially fixed. All of the examples mentioned above have been fixed except the LibMathSigned natural log restriction.

[N17] Inconsistent style

The code base does not use a consistent style. For example, in the Collateral contract, the private function _withdraw has an underscore _ prepended while the private function withdrawFromAccount from the Perpetual contract doesn’t.

Taking into consideration how much value a consistent coding style adds to the project’s readability, enforcing a standard coding style with help of linter tools such as Solhint is recommended.

Update: Fixed.

[N18] Lot size checks are generalizeable

Throughout the code, there are many instances of checking that some amount, after running a modulo of tradingLotSize on it, returns 0. One such check exists on line 63 of Exchange.sol, while another exists on line 119. Similar checks involving lotSize exist within AMM.sol here and here.

Since this code is repeated many times throughout the codebase, consider implementing it within a function or modifier, and instead using this whenever needed. By doing so, the code will follow the “don’t repeat yourself” development principle, and the surface for error will be reduced since all instances of this code will behave the same way.

Update: Acknowledged.

[N19] Repeated code

To improve readability and reduce code size, consider encapsulating the repeated code into a single function that can be called when needed.

Update: Fixed. The repeated code has been encapsulated into the pushCollateral function.

[N20] SafeMath and SignedSafeMath should be used

Currently in the code, the libraries LibMathSigned and LibMathUnsigned are used for operations on int256 and uint256 types respectively. The functions mul, div, sub and add that currently exist in LibMathSigned match the functionality of OpenZeppelin’s SignedSafeMath library. Likewise, the functions mul, div, sub, add, and mod within LibMathUnsigned match the functionality of OpenZeppelin’s SafeMath library.

Consider removing the duplicated functions from the LibMathSigned and LibMathUnsigned libraries, and instead using the OpenZeppelin libraries as-is, within their own files. Everywhere that imports LibMathSigned or LibMathUnsigned can import SignedSafeMath or SafeMath, with a corresponding using (library) for (type) statement. By using SafeMath and SignedSafeMath within their own files, updates to the libraries will be much easier to apply. Additionally, the potential for error from re-implementing SafeMath and SignedSafeMath functions will be completely eliminated.

Update: Acknowledged. The Monte Carlo team intends to address this when upgrading to Solidity 0.6.x.

[N21] Typographical errors

  • In line 419 of AMM.sol: “already” is misspelled
  • In line 37 of LibTypes.sol: “current” is misspelled
  • In line 42 of LibTypes.sol: “applied” is misspelled
  • In line 79 of Position.sol: “negative” is misspelled
  • In line 207 of Position.sol: “invalid” is misspelled
  • In line 265 of Position.sol: “liquidated” is misspelled
  • In line 279 of Position.sol: “position” is misspelled
  • In line 292 of Position.sol: “negative” is misspelled
  • In line 68 of Collateral.sol: “negative” is misspelled
  • In line 7 of GlobalConfig.sol: “submiting withdrawal apllication” should be “submitting application”

Update: Partially fixed. Some of the examples mentioned above have been corrected or removed. However, there are some typographical errors in MarginAccount, which can be found here, here and here.

[N22] Inherit from interfaces

The interface folder contains a number of interfaces for contracts within the system. However, the contracts do not explicitly implement these interfaces when needed.

Consider updating the inheritance declarations of the AMM, GlobalConfig, Perpetual and PerpetualProxy contracts to implement the relevant interfaces.

Update: Acknowledged.

[N23] Missing view modifier

For added readability and better code readability, consider declaring the following functions as view since all of them preserve the contract’s storage:

In Position contract:

In Perpetual contract

In PerpetualProxy contract:

Update: Not an issue. These calculations may update the funding.


2 critical and 1 high severity issues were found. Some changes were proposed to follow best practices and reduce potential attack surface. We later reviewed all fixes applied by the Monte Carlo team and all most relevant issues have been fixed.