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Ribbon Finance Audit

The Ribbon Finance team asked us to review and audit their Theta Vault and Delta Vault smart contracts. We looked at the code and now publish our results.


We audited commit 3fa3bec15ad1e2b18ad87f979b87a68368497f13 of the ribbon-finance/ribbon-v2 repository. In scope were the following contracts:

  • GammaInterface.sol
  • IERC20Detailed.sol
  • IGnosisAuction.sol
  • IRibbon.sol
  • IRibbonThetaVault.sol
  • IWETH.sol
  • GnosisAuction.sol
  • ShareMath.sol
  • SupportsNonCompliantERC20.sol
  • Vault.sol
  • VaultLifecycle.sol
  • OptionsVaultStorage.sol
  • StrikeSelection.sol
  • RibbonDeltaVault.sol
  • RibbonThetaVault.sol
  • RibbonVault.sol

Update: The Ribbon Finance team has partially fixed the issues identified in this report through pull requests in the audited Github repository.

Overall Health

In general, we found the Ribbon team to be highly responsive, easy to work with, and open to feedback.

Most of the codebase was well documented, but there is still some room for improvement. We found the commit we audited to be fully functional, but harder than necessary to reason about at times. The codebase has numerous casts and calls to helper functions to assert that those casts are safe; they make the code harder to read and can be error prone. We noticed an inconsistent coding style, imprecise language and naming conventions, unnecessarily complex control flows, and occasional remnants of previous refactors.

The Ribbon team has been rapidly iterating on their contracts even while our audit was underway. We must note that safely porting over fixes from this audit to a codebase that has been substantially iterated on can be non-trivial. We recommend all iterations of the codebase undergo audits and that no code that has not been audited be relied upon to handle user funds.

System Overview

Ribbon Finance is a protocol for creating structured financial products on Ethereum. The system provides “vaults” that run automated strategies which allow users to earn yields on their deposits. Users pay vault fees for this service on a weekly basis, but only if the vault is profitable in that week.

Currently, Ribbon offers two types of vaults, Theta and Delta vaults.

Theta vaults run an automated options selling strategy, which consists of writing and auctioning out of the money options and collecting the premiums. In order to create and manage options, Theta vaults make use of Opyn’s Gamma Protocol to mint oTokens, which represent the right to buy or sell a certain asset at a predefined price. Those oTokens are then auctioned via Gnosis Batch Auctions.

Delta vaults, on the other hand, provide a way to hedge long positions, implementing a strategy that consists of using a percentage of all the deposited funds to buy options from Theta vault auctions and claiming profits if those options expire in the money.

Privileged Roles

There are two main roles in the system, the owner and the upgradeability admin.

The owner of a vault is responsible for its correct operation and is required to periodically execute administrative functions throughout a vault’s lifecycle. The owner can:

  • Manage the ownership of the vault
  • Change the deposit cap of a vault
  • Change the performance and management fees charged to vault users
  • Change the recipient for all of the collected vault fees
  • Change the duration of Gnosis auctions
  • Control the option premium that Delta vaults will pay
  • Manually set a strike price that the Theta vaults will use
  • Control the step and delta used in the automatic strike selection contract
  • Close an existing position and create a new one
  • Start a new round that makes use of the newly created option
  • Burn oTokens that were not sold during an auction
  • Set the percent of the Delta vault that will be used to purchase options

The admin has the power to completely overwrite the vault’s implementation.

Initially, both the owner and admin accounts will be completely controlled by the Ribbon Finance team. Considering the amount of control that these roles have within the system, users must fully trust that the entities controlling those roles will always behave correctly and and in the best interest of the system and its users.


Here we present our findings.

Critical severity

[C01] Instant withdrawals can disable essential vault functionality

When users deposit some amount of asset into a vault, their newly deposited asset are considered pending until the beginning of the vault’s next round. While pending, deposits are not being actively managed by the vault, and they are, appropriately, intentionally disregarded for many of the vaults internal accounting purposes. Pending deposits do not share in profits or losses of the vault while pending and they should not be included in the determination of the vault’s price per share. Vaults keep a running count of the total pending asset in the vaultState.totalPending state variable so that they can actively disregard all of the pending asset where appropriate, and also so that they can mark all of the pending asset as active when the next round starts.

Delta vaults provide a withdrawInstantly function, which permits users to withdraw asset, including any pending asset, at any time. However, this function fails to update vaultState.totalPending, even after the user has withdrawn some amount of pending asset. As a consequence, for any sequence of deposits that are followed by instant withdrawals during the same round, vaultState.totalPending will only ever increase. This results in a mismatch between the number that is stored in vaultState.totalPending and the actual amount of pending asset the vault possesses.

This has far-reaching ramifications, because so many of the calculations in the vault are affected, including:

  • The balance calculation within the pricePerShare function of RibbonVault
  • The pps calculation in accountVaultBalance of RibbonVault
  • The roundStartBalance calculation in the rollover function of VaultLifecycle

In many cases, OpenZeppelin’s SafeMath is used to subtract the value of vaultState.totalPending from the total asset balance held by the vault, to exclude the former from being counted as active. This approach is reasonable and accurate, as long as vaultState.totalPending reflects the actual amount of pending asset in the vault. However, since vaultState.totalPending is never decremented when pending asset is withdrawn, it can become larger than the total balance. When this happens, many of the internal arithmetic operations of the vault overflow and then revert.

In this scenario, users can still withdraw funds, but the vault cannot carry out many other essential functions, including rolling to the next option. The only way to recover complete functionality would be to replace the logic of the Delta vault via an upgrade.

It is important to note that this critical loss of functionality can easily arise as a result of normal vault activity.

However, there is another scenario that could play out that stems from the failure to decrement vaultState.totalPending correctly. That scenario would probably be less likely to happen during the normal operation of the vault, but it can result in all user funds being locked in the vault. It would be trivial for a malicious party to put the vault in such a state.

In fact, this state can easily be achieved by performing the following steps immediately after an oToken auction ends:

  1. Deposit an amount of asset equal to the current balance held by the vault (using a flash loan if needed).
  2. Perform an instant withdrawal of all the funds that were just deposited. Then, because of the failure to decrement, vaultState.totalPending would be equal to the current balance of the vault.
  3. Call the claimAuctionOtokens function, which would force a reevaluation of the price per share because of its updatePPS modifier.

While updating the price per share, the roundStartBalance would incorrectly be set to 0 because of the subtraction of pendingAmount from the currentBalance of the vault. When the modifier calls the getPPS function in VaultLifecycle, the price per share is derived from a multiplication of the roundStartBalance, always returning 0 under these conditions.

Whenever roundPricePerShare is equal to 0, withdrawals will fail due to require statements in the ShareMath library’s underlyingToShares and sharesToUnderlying functions that are called as part of every withdrawal. All user funds will be locked in the vault.

Consider decrementing vaultState.totalPending correctly whenever any amount of pending asset is withdrawn from a vault. Also consider expanding the test suite to cover more complicated deposit and withdrawal scenarios.

Update: Fixed in commit f882323642c23f02965adfa378a6b062e0ca65ce of PR#79.

High severity

[H01] Corruptible storage upgradeability pattern

Both RibbonThetaVault and RibbonDeltaVault inherit from RibbonVault and either OptionsThetaVaultStorage or OptionsDeltaVaultStorage, respectively. RibbonVault itself inherits from OptionsVaultStorage, so that the latter is also inherited by both the RibbonThetaVault and RibbonDeltaVault.

All of these storage contracts reside in OptionsVaultStorage as “top-level” storage contracts. Each of these top-level contracts inherit from additional “storage contracts” that are suffixed with a version number, e.g.: OptionsVaultStorage inherits from OptionsVaultStorageV1. The intent is to allow for upgradeability of the storage layout of the top-level storage contracts by just having them inherit from additional storage contracts as necessary.

The inline comments explain the intention well:

When we need to add new storage variables, we create a new version of OptionsVaultStorage e.g. OptionsVaultStorageV, so finally it would look like contract OptionsVaultStorage is OptionsVaultStorageV1, OptionsVaultStorageV2

The issue is that multiple top-level storage contracts are being inherited by the RibbonThetaVault and RibbonDeltaVault contracts. This storage upgradeability pattern is not composable in this manner without modifications. In both cases, upgrading OptionsVaultStorage to include additional storage slots would shift storage slots from any subsequently inherited top-level storage contracts, thus corrupting the storage layout.

Since the newly upgraded smart contracts would be reading from some storage slots that held data which would no longer correspond to the new storage layout, the system would break in an unpredictable manner that would be dependent on the number of storage slots added as part of the upgrade.

Consider reserving storage slots in OptionsVaultStorage so that any future upgrades to that contract will not shift the storage slots of other top-level storage contracts. A common pattern is to use a __gap array for this purpose and to decrement the number of slots used by the __gap as necessary during upgrades. Alternatively, consider making OptionsVaultStorage non-upgradeable and only allowing OptionsThetaVaultStorage and OptionsDeltaVaultStorage to be upgradeable. Also consider adding additional inline comments explaining the limitations of this upgradeability pattern in practice to avoid future iterations reintroducing corruptible upgradeable storage layouts.

Update: Fixed in commit b362625ae3c6917f41e801ddf7a5bd5d4d8fb295 of PR#85.

Medium severity

[M01] Documentation issues

Although many functions in the codebase are well documented, there are numerous other functions that are lacking sufficient inline documentation. For example:

There are also instances of misleading documentation. For example:

To further clarify intent and improve overall code readability, consider adding additional inline documentation, fixing documentation mistakes, and carefully verifying all documentation throughout the codebase.

Update: Fixed in commit 8b7bcedd0050823842b2b65c5d459fc90542c82a of PR#80. However, this PR also introduces a few unaudited functions such as getVaultFees in VaultLifecycle, setOptionsPremiumPricer in RibbonThetaVault, and others. Additionally, the verifyOtoken function was modified to accept additional arguments, but those arguments are not supplied where the function is used.

[M02] Rounds with no locked asset can lead to fee miscalculations

In the _closeShort function of RibbonThetaVault, the state variable vaultState.lastLockedAmount is set to vaultState.lockedAmount unless the latter is zero, in which case lastLockedAmount is just copied back on to itself. Aside from using gas for an unnecessary SSTORE, this has the effect of essentially skipping over recording rounds with no lockedAmount of asset.

This is problematic, because prior locked amounts are used to assess performance fees and management fees in the _collectVaultFees function.

The performance fee is directly impacted by the difference between the amount of locked asset in the current round and the round immediately prior. Disregarding a round that legitimately had no lockedAsset (an empty round), distorts this calculation.

In some cases, the fee assessment will just be incorrectly skipped altogether.

The _collectVaultFees function relies on the condition that the current round’s locked balance must be greater than the prior round’s locked balance to assess any fees at all. Since the empty round was not recorded, in the case where the round prior to the empty round had more asset than the current round after profits, no fees would be assessed.

Consider keeping track of all actual amounts of locked asset to ensure that vault fees are always assessed correctly.

Update: Fixed in commit ce98d07920da508ee6ad4907d55bf4e901a0aa5b of PR#81. The code no longer skips recording rounds with no lockedAmount of asset. However, code to initialize the value of vaultState.lastLockedAmount was also removed. The latter removed code was not directly related to to the issue outlined above. Not initializing the value of vaultState.lastLockedAmount to the vaults’ balance of asset should not be problematic for the assessment of fees for the general case where the token balance at time of initialization is zero. Outside of that context, given the scope constraints of fix reviews, we have not considered the implications of that change.

[M03] Errors and omissions in events

Throughout the codebase, events are used to signify when changes are made to the contracts. However, many events lack indexed parameters or are missing important parameters. Some sensitive actions are lacking events altogether.

Events lacking indexed parameters include:

  • The InitiateWithdraw, CapSet and Withdraw events in RibbonVault should index their address arguments.
  • Most of the events in RibbonThetaVault should index their address arguments.
  • The events in GnosisAuction should index their address arguments.
  • The events in StrikeSelection should index their address arguments.

Events missing important parameters include:

Event inconsistencies include:

Sensitive actions that are lacking events include, but are not limited to:

  • The setFeeRecipient function in RibbonVault
  • The setStrikePrice function in RibbonThetaVault
  • The baseInitialize function in RibbonVault does not emit events for most of the state variables it sets.
  • The initialize function in RibbonThetaVault does not emit events for most of the state variables is sets.
  • The initialize function in RibbonDeltaVault does not emit events for most of the state variables is sets.

Consider more completely indexing existing events, adding new indexed parameters where they are lacking, and being consistent with event argument types to avoid hindering the task of off-chain services searching and filtering for events. Consider emitting all events in such a complete manner that they could be used to rebuild the state of the contract.

Update: Partially fixed in commit 1d3e518eed09598c1f9a9105c94032a96a12de6e of PR#82.

[M04] Inconsistent usage of reentrancy guard

Throughout the codebase, most of the external and public functions that modify state use the nonReentrant modifier in order to explicitly prevent reentrancy.

A notable exception to this is the startAuction function in RibbonThetaVault. It performs a call to the library function VaultLifecycle.startAuction, which then makes a call to the library function GnosisAuction.startAuction, where an external call to IGnosisAuction.initiateAuction is made.

At the end of the originally called startAuction function, the optionAuctionID state variable is modified, violating the recommended Check-Effects-Interaction pattern.

Even if there are no immediate negative implications of allowing reentrancy in this case, this pattern makes it easier for future iterations of this codebase, or the codebase of the projects this project integrates with, to introduce vulnerabilities.

Consider always explicitly protecting functions from reentrancy when they make external calls to third-party code, as is the case with the startAuction function in RibbonThetaVault.

Update: Fixed in commit fc3ebff1b54340c0045989fc3e8e11f2fbd81cae of PR#83. However, an unimplemented, unaudited modifier onlyKeeper was added to the startAuction function alongside the suggested nonReentrant modifier.

[M05] Vault fees are miscalculated

In the _collectVaultFees function of the RibbonVault, if the vault was profitable during the preceding week, then vault fees are tabulated and assessed for that week.

If a user deposits funds mid-week, then those funds remain “pending” until the vault’s next round begins. Since those funds are pending and are not actively participating in the vault, they should not share in any of the profits or losses that the vault incurs over that time period.

To enforce this, one component of the vault fees, the “performance fee”, is charged on the amount of asset locked in the vault, less any pending amount (appropriately labeled lockedBalanceSansPending).

The second component of the vault fees, the “management fee”, should be assessed against the same base of assets. However, the function fails to exclude the pending assets when determining the management fee – instead, it is incorrectly assessed against all of the locked assets, pending or not. This causes the assessed fees to be higher than intended.

To clarify and align the intent of the function with the implementation, and to avoid over-assessing vaults fees, consider excluding the amount of pending asset from the management fee calculation.

Update: Fixed in commit cb619dcc2407a0c568f25affbb33f5e617bcf152 of PR#73. However, that PR includes unaudited code from commits that we did not review. While we can confirm the changes in the referenced commit do address the issue in isolation, if they had been applied directly to the commit we audited, we cannot confirm that any of the prior unaudited changes the PR is based on have not introduced other issues.

Low severity


[L01] Numerous uint types and resultant casts increase system complexity

Throughout the codebase, numerous unsigned integer (uint) values of various sizes are used. Those less than 256-bits (uint256) are used extensively. Non-uint256 sizes are generally chosen to facilitate tight packing inside of structs to save on storage costs. However, projects must carefully weigh the realized gas savings against the additional complexity such a design decision introduces.

Since the Ethereum Virtual Machine operates on 256-bit integers, additional operations must be performed to process non-uint256 values. These additional operations increase the bytecode size of contracts and consume additional gas during execution. This non-trivial increase in complexity at the bytecode level is not the only place complexity is introduced, however.

Because this project relies extensively on math libraries such as OpenZeppelin’s SafeMath, which expect uint256 values, the codebase is filled with explicit casts transforming non-uint256 values back in to uint256 values before they can be used in the business logic of the project. Often times, the values are cast back to their original types after the business logic is complete. These numerous casts make the codebase harder to read and understand.

In response to the resultant increased propensity for inadvertent truncations, the codebase often uses helper functions to assert uint sizes before explicit downcasts. This makes explicit casting less error prone, but, again, increases the complexity and decreases the readability of the codebase.

To do less explicit casting in the business logic, functions routinely receive parameters as uint256, even when the associated underlying value is of a smaller type. For example, redeem and _redeem receive uint256 shares parameters but unredeemedShares is a uint128. In such cases, the helper functions are used to manually assert that shares fits in a uint128. This is much more error prone than letting the compiler enforce the proper types.

In other cases, there are no explicit checks that these casts will not overflow. For example, in RibbonVault when the _depositFor function accounts for new deposits, the uint256 amount variable, which represents the token amount being deposited, is cast to a uint104. At a glance this looks like an unsafe cast, but, in fact, a require statement earlier in the function implicitly ensures the cast is safe. This makes spotting unsafe casts, as reported in issue L14, harder to notice.

In addition to the general increase in complexity of the codebase, we also noted a few specific cases where these non-uint256 values and associated casts led to additional confusion, unnecessary operations, or were particularly illustrative of how they lend themselves to the introduction of errors:

  1. There is an assertion that the shares parameter in the _redeem function of RibbonVault is a uint104 when it should be a uint128. This happens in the ShareMath contract’s getSharesFromReceipt function as well. In fact, the appropriate type for shares values is often unclear, with the structs using uint128 values and functions that deal with shares sometimes specifying uint104 and other times specifying uint128.


  2. In several cases, the decimals value is used for exponentiation of the literal base 10. The practice of casting uint values used in business logic of the code to uint256 is applied in these cases, even though it is unnecessary. Since Solidity 0.7.0, “Exponentiation and shifts of literals by non-literals will always use uint256 or int256 as a type.”

  3. In the ShareMath library, it is unnecessarily asserted that shares is a uint104 after all calculations involving shares have already been completed and despite the fact that shares is not being returned.

  4. In RibbonDeltaVault, receiptShares is unnecessarily cast to uint256.

  5. vaultState.round is unnecessarily cast to a uint256, only for it to be cast back to a uint16 without modifying it. This happens again in the initiateWithdraw function and the completeWithdraw function.

To reduce the overall complexity of the code, consider using non-uint256 values only when necessary. To reduce potential confusion, when smaller uint types are used, consider using the smaller types consistently to allow the compiler to help type-check values. To make the code easier to read, consider using the OpenZeppelin SafeCast library where possible to minimize the need for separate casting and type assertion operations. Alternatively, consider updating the codebase to Solidity 0.8 (as recommended in issue L12), which has checked math by default and could eliminate the need for explicit casting solely to perform SafeMath operations.

Update: Fixed in commit 79ce9cbfb2d7102859ca096997bcd7c5852b5116 in PR#88. List item 5 from above was not modified, because the current behavior is correct. It is more gas efficient than alternatives. Many of the unnecessarily small uint function arguments were made to be uint256.

[L02] Instances of unnecessarily convoluted control flow

Unnecessarily complicated code increases the potential for the introduction of bugs, decreases the readability of the codebase, and makes the project harder to reason about and maintain. As a result, even just occasional sections of unnecessarily complicated code can have a negative impact on the overall security of the project.

There are parts of the codebase that could benefit from being rewritten to reduce their complexity. For example the _getBestStrike function is currently written as follows:

function _getBestStrike(
uint256 finalDelta,
uint256 prevDelta,
uint256 strike,
bool isPut
) private view returns (uint256 finalStrike) {
if (isPut) {
if (finalDelta == prevDelta) {
finalStrike = strike.add(step);
} else {
finalStrike = strike;
} else {
if (finalDelta == prevDelta) {
finalStrike = strike.sub(step);
} else {
finalStrike = strike;

However, it could be simplified to something significantly shorter and much easier to read, such as the following pseudocode:

func _getBestStrike(
) {
if (finalDelta != prevDelta) {
return strike

return isPut ? strike.add(step) : strike.sub(step)

There are opportunities for similar simplifications throughout the codebase. For example:

To increase the readability, maintainability, and overall clarity of the codebase, consider trying to simplify control flow logic wherever possible, but particularly in the instances identified above.

Update: Fixed in commit e61dfef6019e03f52f8c295bc8612b2afc3e5620 in PR#89.

[L03] Duplicated code

There are instances of duplicated code within the codebase. Duplicating code can lead to issues later in the development lifecycle and leaves the project more prone to the introduction of errors. Errors can inadvertently be introduced when functionality changes are not replicated across all instances of code that should be identical. Examples of duplicated code include:

Instead of duplicating code, consider having just one contract or library containing the duplicated code and using it whenever the duplicated functionality is required.

Update: Fixed in commit e1ec5868835ee2ed718668695157bea11f209553 of PR#90.

[L04] Duplicated price per share calculations

A vault is simultaneously an ERC20 token, and balances of accounts correspond to the number of shares users hold. These shares represent how much of the collateral held in a vault can be withdrawn by each user when the current round ends. Throughout the lifecycle of a vault, the amount of collateral that backs each share changes, and the vault calculates this rate by dividing the total amount of collateral by the total share supply.

Multiple slightly different implementations of this calculation can be found throughout the codebase:

Even though these are essentially equivalent to each other, having multiple different implementations for the same calculation leaves the project more prone to the introduction of errors. Refactors and changes made to some of these implementations might not get replicated over to the others.

Instead of relying on multiple equivalent but separate ways of calculating the price per share, consider consolidating this calculation into only one function that can be reused throughout the codebase when needed.

Update: Fixed in commit 4e7890a4a110e6b7aacac875e486106edd908c10 in PR#91. Unrelated to the issue, the PR also removes the concept of an initialSharePrice from the system, a change which is outside the scope of this fix review.

[L05] Inconsistent upper bounds on optionAllocationPct

The optionAllocationPct state variable in RibbonDeltaVault is required to be less than 100% upon initialization. However, the setOptionAllocation function requires the optionAllocationPct variable to be less than 10%.

Misleading comments about the number of decimals this variable should use makes the inconsistent require statements even more confusing.

Consider clarifying the documentation around this value and either using a consistent range for associated require statements or adding additional inline comments explaining the intentionality of the different upper bounds.

Update: Fixed in commit 1bcdedeb197d0c270e1a7888ef4ad7729468fe2d of PR#94.

[L06] Lack of input validation

Although most of the functions throughout the codebase properly validate function inputs, there are some instances of functions that do not. For example:

  • verifyConstructorParams is called from baseInitialize of RibbonVault. However, neither function validates the input for the _managementFee argument of baseInitialize.
  • verifyConstructorParams does not check that _vaultParams.minimumSupply < _vaultParams.cap. If this inequality does not hold, there could be states where it would be impossible to deposit asset into the vault.
  • setFeeRecipient does not check that newFeeRecipient is not the same as the existing feeRecipient.
  • setDelta and setStep do not perform any sort of input validation.
  • StrikeSelection‘s constructor does not check that _delta < 10000, with the value 10000 representing an option delta of 1. The maximum value for an option’s delta is 1, so this inequality must always hold.

To avoid the potential for erroneous values to result in unexpected behaviors or wasted gas, consider adding input validation for all user-controlled input, including owner-only functions.

Update: Fixed in commit 83584f43ac494092cc744ae6c9b21eb5b23b7453 in PR#92.

[L07] Magic numbers are used

Throughout the codebase, there are several occurrences of literal values with unexplained meaning. For example:

To improve the code’s readability and facilitate refactoring, consider defining a constant for every magic number, giving it a clear and self-explanatory name. For complex values, consider adding an inline comment explaining how they were calculated or why they were chosen.

Update: Partially fixed in commit c9ddbbd86d4434f1e7fdc0f760dff6f9d87e6322 in PR#93. The literal “value by which the annualized volatility is multiplied”, as discussed in the last bullet, was not addressed.

[L08] Mismatched lower bounds for vault fees

When a round is profitable, vaults assess two fees – a performance fee and a management fee.

The setPerformanceFee function allows performanceFee to be set to zero. However, the verifyConstructorParams function, which is called in baseInitialize for the vault, requires a non-zero value for performanceFee. This discrepancy, coupled with a lack of inline documentation on the matter, can lead to confusion.

Consider having a consistent permissible range for performanceFee. Further, to clarify intent and improve the overall readability of the codebase, consider documenting the reasoning behind the upper and lower bounds for all configurable values.

Update: Fixed in commit 103568180c726dcc3dc5f3bf0f683c871d74132b of PR#95.

[L09] Inconsistently formatted, unhelpful, or missing revert messages

Many of the error messages in require statements throughout the codebase were found to be too generic, not accurately notifying users of the actual failing condition causing the transaction to revert. Additionally, error messages throughout the codebase were found to be inconsistently formatted.

For instance, the require statements throughout GnosisAuction contain entire equations along with their error messages, but elsewhere the require error messages, like these in ShareMath and this in RibbonVault, are very short and non-descriptive.

The require statements on line 129 and line 149 of RibbonThetaVault both check that a premium discount is within the correct range, but provide different error messages.

Finally, the require statement on line 123 of StrikeSelection does not provide any error message at all.

Error messages are intended to notify users about failing conditions, so they should provide enough information so that appropriate corrections can be made to interact with the system. Uninformative error messages greatly damage the overall user experience, thus lowering the system’s quality. Therefore, consider reviewing the entire codebase to make sure every require has an error message that is consistently formatted, informative, and user-friendly.

Update: Partially fixed in commit b52498add9d7f4c467ec5ca9d4288568010e26b2 of PR#96. Although the specific instances we flagged above were addressed, the codebase is still inconsistent. Some error message are helpful and others are single word error messages prefixed with an exclamation point.

[L10] Naming issues hinder code understanding and readability

To favor explicitness and readability, several parts of the contracts may benefit from better naming. We noted the following general issues:

  • The terminology around the asset in the vault is not as clear as it should be. It is sometimes referred to as collateral and other times implicitly referred to as underlying. Since vaults have an underlying parameter – this imprecise naming can lead to unnecessary confusion. Consider being precise and consistent when referencing tokens in the system either explicitly or implicitly.


  • The library name SupportsNonCompliantERC20 is misleading. In fact, it only supports a single non-compliant ERC20, which is USDT. There are other tokens that have the same “non-compliant” approval behavior and this library would not support any of them. (CRV for instance.) If the contract is only meant to handle USDT, consider renaming it. Alternatively, if it may handle additional non-compliant tokens in the future, consider adding inline comments signaling this intention.

Additionally, we recommend the following, more specific, suggestions related to naming:

Consider renaming any potentially confusing or misleading parts of the codebase to increase overall code clarity.

Update: Partially fixed in commit 29d4de9b8bd3cbb7a8f34650daf20fb01be06e43 of PR#97.

[L11] Identical constants defined independently

The constant PLACEHOLDER_UINT is defined in ShareMath and again in RibbonVault. In both cases the constant is set to the same value, 1. However, having no single source of truth for identical constants is error prone, especially as the project is iterated on and refactored.

Since every contract that uses PLACEHOLDER_UINT also imports ShareMath, consider using ShareMath.PLACEHOLDER_UINT instead of redefining PLACEHOLDER_UINT in RibbonVault. Alternatively, consider setting the locally defined PLACEHOLDER_UINT equal to ShareMath.PLACEHOLDER_UINT directly, so that if the latter is updated the former will be as well.

Update: Fixed in commit a869738765a4c40b6f8bf5b03703bb255ba4da7f of PR#98.


[L12] Solidity version varies, is not the most recent

The version of Solidity used throughout the codebase varies, but it is not pinned, nor is it the latest stable version.

The choice of Solidity version should always be informed by the features each version introduces that the codebase could benefit from, as well as the list of known bugs associated with each version.

As we mentioned in issue L01, a benefit of using the latest version of Solidity (0.8.7 at time of writing) is that it provides checked arithmetic operations by default, making the use of the SafeMath and DSMath libraries, and all of the attendant casting, unnecessary in many cases.

Consider taking advantage of the latest Solidity version to improve the overall readability of the codebase and to help reduce the complexity discussed in issue L01. Regardless of which version of Solidity is used, consider pinning the version consistently throughout the codebase to prevent the introduction of bugs due to incompatible future releases.

Update: Fixed in commit 343e681d8bbf89981062cb5a0cbe7239b655f2d2 of PR#101.

[L13] Unnecessary max redemption of shares in some cases

The withdrawInstantly function in the RibbonDeltaVault contract allows a user to instantly withdraw asset from the vault. This is accomplished via the withdrawal of newly deposited asset first, and then the redemption of shares that are either held by the user or held by the vault, in that order.

However, as currently implemented, in any case where even a single share must be withdrawn from the vault, the _redeem function is called with the isMax boolean argument set to true. This behavior could lead to confusion and the unnecessary withdrawal of collateral from the vault.

To better clarify intent and to align the code with expectations, consider only withdrawing the minimum required number of shares to satisfy the instant withdrawal request.

Update: Not fixed.


[L14] Casting between types without overflow checks

Throughout the codebase, there are instances of larger uint types being cast to smaller uint types without overflow checks. For example:

To ensure that type casts cannot corrupt values and lead to undesirable system behavior, consider using the OpenZeppelin SafeCast library for casting operations where possible.

Update: Fixed in commit ca15ff53c62d9f86de417e1060ba778939fe6892 of PR#103. Although the Ribbon Finance team did not use the recommended OpenZeppelin library, they did add overflow checks for the instances identified above.

[L15] Unused code

Throughout the codebase, there are cases of unused code. For example:

To improve the readability of the codebase and limit the potential attack surface, consider always removing unnecessary lines of code.

Update: Fixed in commit e1ec5868835ee2ed718668695157bea11f209553 of PR#90. The Ribbon team explained that, as the InitiateGnosisAuction and PlaceAuctionBid events are emitted from libraries, they would not be part of the vaults’ ABIs, so they included these events in the vault contracts in order to facilitate their detection and decoding.

[L16] Error-prone variable shadowing

There are instances in the codebase where local variables are declared with the same name as existing declarations. For instance:

Variable shadowing can make the codebase harder to read and variables harder to reason about. It can also prevent the compiler from raising warnings when local variables are refactored incompletely, leading to unexpected errors that can be difficult to debug.

To increase the overall readability and maintainability of the codebase, consider eliminating instances of variable shadowing by renaming the local variables where possible.

Update: Fixed in commit df70e607c4f53afe03ac97d070d5b32bfb768fbb of PR#105.

Notes & Additional Information

[N01] Broken links in inline documentation

Throughout the codebase, various links present in the inline documentation are broken. For example:

  • These links in RibbonVault
  • This link in VaultLifecycle

To make the codebase easier to understand and maintain, consider reviewing the links in the codebase and fixing any which are broken.

Update: Fixed in commit 6edda917d1e019ba86a4fd5854ba96abaa1aab42 of PR#99.

[N02] Implicit access control has drawbacks

Most administrative functions for the vaults use the onlyOwner modifier so that only the owner address can execute them. However, the rollToNextOption function of RibbonThetaVault does not use this modifier, but instead implicitly relies on the nested call to startAuction for access control. While this effectively prevents accounts other than the owner from calling rollToNextOption, it does so only after burning non-negligible amounts of gas and is less readable than an explicit access control declaration.

In order to avoid unnecessary gas consumption in some cases and to increase the legibility of the codebase, consider having all functions explicitly define their access control mechanisms.

Update: Acknowledged. The Ribbon Finance team has said that this is addressed with their new keeper role and onlyKeeper modifiers, though those additions and modifications have not been audited by OpenZeppelin at this time.

[N03] Incomplete enum definition

The ActionType enum is missing Liquidate, which is present in Gamma Protocol’s Actions library.

To facilitate future iterations and minimize potential confusion, consider using the complete enum definition from Opyn’s Gamma Protocol.

Update: Fixed in commit 9f1d067fa726adf8fe4c4bc61589429acd7794d0 of PR#100.

[N04] Inconsistent use of safe math libraries

The codebase uses two separate math libraries, namely, DSMath and SafeMath, to perform common math operations in a safe manner. The former library, despite being partially duplicated throughout the codebase, is used relatively sparsely.

While not inherently problematic to use two libraries that offer essentially the same functionality, it can lead to unnecessary confusion. For instance, in the StrikeSelection contract, DSMath is inherited from, but only its sub method is used. In the same contract, the SafeMath library is imported and used for uint256 values. Then its sub method is used for half the sub calls in the contract. Without some associated documentation, such an implementation risks introducing unnecessary confusion and increasing the size of the codebase with no clear benefit.

In another case, RibbonDeltaVault]( inherits from DSMath, but only the min method is used. Since OpenZeppelin contracts are being imported as a dependency already, the OpenZeppelin Math library could be used to provide this min functionality.

To simplify the codebase, reduce bytecode size, and increase readability, consider using a single vendor for safe math functionalities and inheriting desired functionality from a single library where possible.

Update: Fixed in commit 810de79b6ea2f81e5c0d146d219fa51284e49c2a of PR#102.

[N05] Inconsistent coding style

An inconsistent coding style can be found throughout the codebase. Some examples include:

The project includes commands to run a linter, but when running them they report several linting issues.

To improve the overall consistency and readability of the codebase, consider adhering to a more consistent coding style by following a specific style guide and by fixing issues reported by the linter.

Update: Partially fixed in commit b869e49b2daf2c860db10efb5fb33967ac42bf89 of PR#104.

[N06] Inconsistent use of named return variables

There is an inconsistent use of named return variables across the codebase.

For instance, in the VaultLifecycle library alone, some functions return named variables, some return explicit values, and others declare a named return variable but override it with an explicit return statement.

Similar inconsistencies can be found throughout the contracts, interfaces, and libraries that comprise the project.

Consider adopting a consistent approach to return values by removing all named return variables, explicitly declaring them as local variables, and adding the necessary return statements where appropriate. This would improve both the explicitness and readability of the code, and it may also help reduce regressions during future code refactors.

Update: Partially fixed in commit 7eefb3e45d2c54411e00614f6230d38ff0f99c13 of PR#107. The new style, though consistently adopted, removes named returns from functions with a single return value, but uses both named returns and explicit returns with functions that return more than a single value. This can be an error prone style. The compiler will not flag functions that do not explicitly return values when named returns are used.

[N07] Lack of explicit visibility in constants

Throughout the codebase there are constants that are implicitly using the default visibility. For example:

  • The USDT constant in SupportsNonCompliantERC20
  • The DSWAD constant in GnosisAuction
  • The DSWAD constant in VaultLifecycle

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

Update: Fixed in commit 36b9f33db90a3eb357eace7c4fd69cad6c2980b6 of PR#108.

[N08] Unnecessary complexity for managementFee calculation

When setting the public state variable managementFee in RibbonVault, both during initialization and in the setManagementFee function, the input parameter corresponds to the yearly management fee whereas the state variable stores the weekly management fee.

In both cases, the input parameter must be immediately divided by the WEEKS_PER_YEAR constant. Because the number of weeks per year differs between leap years and non-leap years, this division can introduce some imprecision. Additionally, having the relevant setter and getter functions dealing in different terms can be confusing.

The similar variable, performanceFee, is handled consistently in weekly terms. This makes the inconsistent handling of managementFee even more confusing and potentially error prone.

In order to make the effective managementFee more precise, make its handling consistent with performanceFee, and reduce the complexity of the code, consider passing the weekly management fee to the contract rather than the yearly management fee.

Update: Not fixed. The Ribbon Finance team state, “we prefer leaving as is”.

[N09] Loss of accuracy as a result of divisions

Due to the fact that division truncates in the EVM, division should be done last unless overflows make such an order infeasible. While divisions are generally performed last throughout the codebase, on lines 128-132 of GnosisAuction, there are a series of SafeMath operations performed to calculate a buyAmount where the division happens in the middle of the calculation, before a multiplication. This can lead to the amplification of the truncation and further loss of precision.

Consider changing the order of operations so that the multiplications are done before divisions where possible.

Update: Fixed in commit 9d036480c0850648b681847f421361dc6481f904 of PR#109.

[N10] Not inheriting from available interfaces

Some of the provided interfaces are not inherited from by the contracts they are meant to describe. This can lead to issues if an interface or corresponding contract is modified in a way that would make them incompatible. Some examples of this lack of inheritance are:

To clarify intent, increase the readability the codebase, and allow the compiler to perform more robust error-checking, consider updating the contracts’ inheritance declarations to explicitly inherit from their corresponding interfaces.

Update: Not fixed. The Ribbon Finance team state, “we prefer leaving as is”.

[N11] Redundant require statements

The ShareMath library includes two helper functions, assertUint104 and assertUint128, to check that a provided uint can fit inside 104 and 128 bits, respectively. These are just wrappers around require statements, and they are used extensively throughout the codebase.

In the getSharesFromReceipt function, the sharesFromRound value is set as the return value of underlyingToShares. However, underlyingToShares asserts that its calculated return value can fit inside a uint104 before returning that value as a uint104. This makes the assertion that sharesFromRound is a uint104 redundant.

Consider removing redundant require statements and assertions to reduce the overall complexity and gas consumption of the codebase.

Update: Fixed in commit 78448cb3ab4626cc68f753141a5354c5579a9361 of PR#110.

[N12] Gas-saving conditional too strict

In the shareBalances function of RibbonVault, there is a conditional statement to short-circuit the function and return 0 for unredeemedShares in cases where there can be no unredeemedShares to count. However, the conditional that is used is too narrow to capture all applicable conditions. Because a vault in its first round cannot have any unredeemedShares, the conditional should also short-circuit the function in the case of equality.

To further clarify the intent of the function and to save additional gas, consider modifying the conditional to be &lt;= rather than strictly &lt;.

Update: Not an issue. It is possible for a vault to have unredeemed shares at round PLACEHOLDER_UINT so the equality from the audited codebase should not be modified.

[N13] Undocumented implicit approval requirements

The RibbonVault contract’s deposit and depositFor functions implicitly assume that they have been granted an appropriate allowance before calling safeTransferFrom.

In favor of explicitness and to improve the overall clarity of the codebase, consider documenting all approval requirements in the relevant functions’ inline documentation.

Update: Fixed in commit f9fe0c7deee8bd4c05645ec5f7e8b5662d4730a3 of PR#112.

[N14] Unused import statements

Within the codebase there are instances of files being imported unnecessarily. For example:

To improve the overall legibility and maintainability of the codebase, consider removing any unused import statements.

Update: Partially fixed in commit 35fd1001b4c0b4b76b47e1a88dac8f6c2606b6f1 in PR#113. SafeERC20 is still imported in RibbonDeltaVault but not used.


1 critical and 1 high severity issues were found. Some changes were proposed to follow best practices and reduce the potential attack surface.