Lending Contracts Security Audit

Audit Report Revisions

Audit Overview

We were tasked with performing an audit of the Optimex codebase and in particular their Lending Contracts module.

The system creates a purpose-built collateral token to be utilized within the Morpho ecosystem to create collateral-loan pairs with Optimex's BTC implementation; a non-transferrable asset meant to represent a value within the Optimex ecosystem.

Over the course of the audit, we identified vulnerabilities around the handling of liquidation surpluses as well as a profit capture which results in a negative economic model around bad debt liquidations.

To note, we observed quite a few hidden assumptions in the system that we advise be documented by the Optimex team.

As examples, Denial-of-Service attacks for withdrawals cannot occur in Morpho positions due to the incapability of depositing collateral to a Morpho position due to the transfer restrictions of the Optimex BTC asset.

We advise the Optimex team to closely evaluate all minor-and-above findings identified in the report and promptly remediate them as well as consider all optimizational exhibits identified in the report.

Post-Audit Conclusion

The Optimex team iterated through all findings within the report and provided us with a revised commit hash to evaluate all exhibits on.

We evaluated all alleviations performed by Optimex and have identified that all exhibits have either been safely acknowledged or properly alleviated.

We consider all outputs of the audit report properly consumed by the Optimex team with no outstanding actions remaining.

Post-Audit Conclusion (a1d9c0732d)

The Optimex team reached out in relation to certain exhibits that had been marked as acknowledged and opted to instead address or refute them.

We validated that exhibit MLR-01C has been properly rectified and that a statement made in the original audit summary was misconstrued and has since been removed.

We continue to consider all outputs of the audit report properly consumed by the Optimex team with no outstanding actions remaining as these items pertained to non-functional aspects of the codebase.

Audit Synopsis

Severity	Identified	Alleviated	Partially Alleviated	Acknowledged
	0	0	0	0
	10	6	0	4
	2	0	0	2
	2	1	0	1
	0	0	0	0

During the audit, we filtered and validated a total of 4 findings utilizing static analysis tools as well as identified a total of 10 findings during the manual review of the codebase. We strongly recommend that any minor severity or higher findings are dealt with promptly prior to the project's launch as they can introduce potential misbehaviours of the system as well as exploits.

Total Alleviations

The list below covers each segment of the audit in depth and links to the respective chapter of the report:

• 🎯 Scope
• 💻 Compilation
• 🔍 Static Analysis
• 👁️ Manual Review
• 🖋️ Code Style