Indexed Finance DEFI5 index pool was exploited for $16M through price manipulation. The attacker used flash loans to swap large amounts of tokens into the pool, manipulating the extrapolatePoolValueFromToken() function. They then called updateMinimumBalance() to force weight rebalancing, allowing them to mint DEFI5 tokens at manipulated prices and drain the pool.
Vulnerability Detected
Our scanners would have identified the vulnerability that led to this exploit.
Function setMinimumBalance performs critical operations but lacks proper access control. This function was exploited in the $16M hack - the attacker called updateMinimumBalance() through the controller to force weight rebalancing at manipulated prices.
// IndexPool.sol - EXPLOITED FUNCTION
// Scanner detected: missing-access-modifiers (CWE-284)
function setMinimumBalance(
address token,
uint256 minimumBalance
) external _control_ {
// VULNERABILITY: Controller can set arbitrary minimum
// Attacker used this to force rebalancing at manipulated prices
Record storage record = _records[token];
require(record.bound, "ERR_NOT_BOUND");
// No validation of minimumBalance against current price!
record.balance = minimumBalance;
// This triggers reweighting based on manipulated balances
}Recommendation: Implement strict access control with multi-sig or timelock. Add price sanity checks before allowing balance updates.
Initializer function initialize lacks access control and can be called by anyone. This is a common proxy pattern vulnerability that can allow attackers to take ownership of uninitialized proxy contracts.
// IndexPool.sol - Vulnerable Initializer
// Scanner detected: missing-access-modifiers (CWE-284)
function initialize(
address[] calldata tokens,
uint256[] calldata balances,
uint96[] calldata denorms,
address tokenProvider,
address unbindHandler,
address exitFeeRecipient
) external { // VULNERABILITY: No access control!
require(!_mutex, "ERR_REENTRY");
require(_controller == address(0), "ERR_INITIALIZED");
// Anyone can call this on uninitialized proxies
_controller = msg.sender;
// ...
}Recommendation: Add an initializer modifier that prevents re-initialization. Consider using OpenZeppelin's Initializable contract.
Multiple functions including swapExactAmountIn, joinswapExternAmountIn, and exitswapPoolAmountIn do not validate that token addresses are not zero. This could lead to failed transactions or unexpected behavior.
Recommendation: Add require(tokenIn != address(0) && tokenOut != address(0), "Zero address not allowed"); at the start of each function.
Function initialize has multiple array parameters but no apparent length validation. Mismatched array lengths could cause unexpected behavior or allow manipulation of token weights.
// IndexPool.sol - Missing Array Validation
// Scanner detected: array-length-mismatch
function initialize(
address[] calldata tokens, // Could be length 5
uint256[] calldata balances, // Could be length 3
uint96[] calldata denorms, // Could be length 7
// ... other params
) external {
// VULNERABILITY: No length validation!
// Different array lengths cause silent failures
for (uint256 i = 0; i < tokens.length; i++) {
// balances[i] or denorms[i] could be out of bounds
_bind(tokens[i], balances[i], denorms[i]);
}
}Recommendation: Add explicit validation: require(tokens.length == balances.length && balances.length == denorms.length, "Array length mismatch");
Functions _bind and _unbind may be vulnerable to reentrancy attacks due to state changes after external calls. Token transfers occur before state updates, violating the checks-effects-interactions pattern.
// IndexPool.sol - Reentrancy Vulnerability
// Scanner detected: classic-reentrancy (CWE-841)
function _bind(address token, uint balance, uint denorm) internal {
// State changes happen after external calls
IERC20(token).transferFrom(msg.sender, address(this), balance);
// VULNERABILITY: State updated AFTER external call
_records[token] = Record({
bound: true,
index: uint8(_tokens.length),
denorm: uint96(denorm)
});
_tokens.push(token);
}Recommendation: Apply checks-effects-interactions pattern. Update all state variables before making external token transfer calls.
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